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LG Electronics sees 80 percent drop in fourth-quarter profit; analysts point of thinning TV margins

FILE PHOTO: A man talking on his phone walks past the logo of LG Electronics at the Korea Electronics Show in 2016 in Seoul, South Korea, October 27, 2016. REUTERS/Kim Hong-Ji

SEOUL (Reuters) – the South Korean LG Electronics Inc (066570.KS) said on Tuesday its fourth-quarter operating profit probably declined by 80 percent compared to the same period a year earlier, falling below analyst expectations.

The world’s second-largest tv maker behind compatriot Samsung Electronics Co Ltd (005930.KS) estimated profit of 75.3 billion won ($67.03 million) October-December last year. That would compare with the 387 billion won average of 11 analyst estimates in I/B/E/S Refinitiv poll.

The revenue probably declined 7 percent to 15.8 billion won, LG said in a regulatory filing, compared to analysts of 16.3 trillion won estimate.

LG did not disclose further details of the fourth quarter operations and will announce full results at the end of January.

Analysts probably caused recorded profit margins for its high-end Tvs is diluted by the increase of the competition, while the company’s smartphone business continues to lose money.

“It’s a surprise,” said analyst Lee Jae-yun at Yuanta Securities. “The home appliance sales were even worse in emerging markets such as China, while the high-end TV business is not making profit as much as before.”

Analysts also said that the result will probably be printed by higher annual bonuses and marketing expenses for new equipment.

LG held a 3 percent of the global smartphone market in the second quarter of last year, showed the latest data from market tracker Counterpoint Research.

Earlier in the day, Samsung estimated 29 percent drop in quarterly profit, the first decline in two years, because the marked, rugged memory chip and mobile phone markets.

Reporting by Heekyong and Yang Ju-min Park; Editing by Christopher Cushing

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