LG Electronics Inc. confirmed that it posted its second best-ever profit and record sales in 2017 after strong demand for its premium TVs and home appliances more than offset losses from smartphone and vehicle components businesses. It also pictured a rosy outlook for the first quarter of this year despite lingering uncertainties due to U.S. trade protectionism.

South Korea’s electronics giant on Thursday reported that operating profit for the fourth quarter ended December 2017 reached 366.8 billion won ($344.8 million), down 29 percent from its best three-month record of 516 billion won in the previous quarter but reversing from a loss of 35.2 billion won a year ago. Sales were up 11.4 percent on quarter and 14.8 percent on year to a quarterly record high of 16.96 trillion won. The results came in line with its preliminary result announced earlier this month.

LG Electronics also reaffirmed that operating profit for full 2017 hit 2.47 trillion won, the second-largest amount after 2.68 trillion won earned in 2009. Sales reached a record high of 61.4 trillion won and it was the first time for the company’s sales to exceed 60 trillion won.

Shares of LG Electronics closed at 103,500 won on Thursday, up 0.98 percent or 1,000 won from the previous session.

The company managed to swing to profit in the fourth quarter from a year ago thanks to brisk sales of its TVs, the company said. Its home entertainment (HE) business that mainly focuses on TV sale, in particular, high-end organic light-emitting diode (OLED) large-sized TV sets, reported 383.5 billion won in operating profir for the fourth quarter, more than doubled from 164.0 billion won a year ago. Sales were up 14.2 percent to 5.47 trillion won over the same period. The company attributed strong demand for its premium TVs during the year-end holiday shopping season in the last quarter of the year to the significant improvement in profitability at its HE business. But on quarter, operating profit in the HE business fell 16.3 percent due to aggressive promotional events launched to bolster sales during the year-end shopping season, the company said.

LG Electronics expected that its TV sales would rise early this year thanks to the Winter Olympics to be held in February. But it noted that the strengthening Korean won against the U.S. dollar remains as a concern because it would weaken the price competitiveness of Korean products in overseas market.

Its home appliance and air solution (H&A) business posted 80.7 billion won in operating profit in the October-December quarter, down 81 percent from the previous quarter and 45 percent from a year ago. Sales reached 4.33 trillion won, down 13.1 percent on quarter but up 6.8 percent on year.

The H&A profit fell in the fourth quarter due to an increase in spending on marketing campaigns for its premium appliance brand, LG Signature, and artificial intelligence (AI) brand ThinQ, as well as one-off massive investment in an appliance manufacturing factory in the U.S. which is under construction to avoid higher tariffs on Korean-made appliances. In August, LG Electronics broke ground for its first U.S. home appliance manufacturing plant costing $250 million in total in Tennessee.

The company said it will seek to foster the growth of its H&A division by actively applying AI and robotic technologies to its appliances.

LG Electronics’ mobile communications division that sells smartphones, however, remained in red. The mobile communications (MC) division posted an operating loss of 213.2 billion won in the October-December period on sales of 3.07 trillion won. Sales were up 9.2 percent compared to the previous quarter thanks to the launch of its V30 smartphone, but the new phone failed to reverse the trend after its sales came below expectations.

An unnamed official from LG Electronics blamed a rise in the price of key smartphone components, such as memory chips, and high marketing costs for the V30 smartphone for the poor performance of MC division.

LG Electronics in November promoted Hwang Jeong-hwan, former executive director of MC division, to vice president overseeing the company’s smartphone business as part of efforts to bolster its MC business. Under the new leadership, LG Electronics will focus to improve its profitability by realigning its smartphone lineup from budget to premium devices and enhance business fundamentals by improving platform efficiency and modular design, the company said.

The company’s vehicle components (VC) division that sells infotainment devices and electronic vehicle solutions also extended losses in the fourth quarter due to a fall in overall vehicle sales at its major customers, weighing on the company’s infotainment device sales. VC business reported an operating loss of 41.1 billion won, widening losses from the 29.0 billion won loss a quarter ago and 14.4 billion won a year ago.

Two days earlier, the company announced in a separate filing that it will pay a cash dividend of 400 won apiece to common stock holders and 450 won to preferred stock owners.

By Lee Jae-cheol and Lee Eun-joo

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