LG Electronics’ Q4 profit estimate misses expectations, shares slide

South Korea’s LG Electronics Inc estimated a fourth-quarter operating profit that fell short of market expectations, which analysts attributed to increased spending to expand market share in the home appliances business.

Shares in LG Electronics fell as much as 6.8 per cent after the guidance on Monday, before paring losses.

LG, in a regulatory filing, said its October-December profit could be 367 billion won ($343.60 million) versus a Thomson Reuters Star Mine Smart Estimate of 485 billion won from a poll of 14 analysts, and compared to a 35.2 billion won operating loss in the same quarter in 2016.

Revenue likely rose 14.8 per cent to 17 trillion won, compared to the 16.3 trillion won Smart Estimate. Smart Estimates give greater weight to recent estimates by the more consistently accurate analysts.

“The revenue exceeded expectations; this means sales were good even considering won-dollar exchange rates. The home appliances business appears to have increased its costs, such as marketing costs, to increase sales during the peak shopping season as LG did in the same quarters in previous years,” said John Park, analyst at Daishin Securities.

Fourth-quarter forecasts for the TV business remains solid on sales of organic light-emitting diode (OLED) and other high-end TV sets after the business set a quarterly record in the previous quarter, two analysts said.

The firm did not disclose further details of October-December operations, and will announce full results at the end of January.