LG has recorded a massive loss for the first time in nearly two years, suffering reported losses of US $487 million.

The blame is being partially rested on slowing consumer demands and declining margins. But the main reason for the high figure is due to a US $400 million fine being issued to the company in the year, by the U.S. Department of Justice for an alleged price-fixing conspiracy of LCD televisions.

But even with this fine aside, the company would still have reported losses of around US $90 million dollars and this is a drastic change from last year’s impressive US $453 million net profit.

LG has claimed that the loss is result of a lower demand for LCD televisions and shrinking margins in mobile phone sales.

“Global demand is slowing amid intensified competition among rival electronics makers,” LG said in a statement.

“We’ll tighten capital spending this year in the face of worsening economic conditions.”

As reported yesterday, LG rose to be the third largest mobile phone distributor in 2009, with an impressive 100 million units shipped out. But due to increased marketing, their profit margin lowered to 5.2 per cent and therefore they are expecting negative growth in that category.

The digital display division had sales increase 16.4 per cent to about $3.4 billion, but the division had an operating loss of $10 million over 2009, this figure shouldn’t really be taken into consideration though, because it includes the $400 million fine.

Like many of its rivals, LG is expecting demand and profitability to fall once again over 2009.