LG Electronics Gross Profits Up - but Hit by Currency Woes

South Korea's LG Electronics has reported a sharp jump in 3rd quarter profits to KRW 571 billion (US$537 million) - a 58% rise on a year ago. At the same time, sales rose by 21% to KRW 6.887 trillion (US$6.479 billion). The profit margin was 4.8%, 1.2%P higher than a year earlier.

On a parent basis, the increase is even higher; sales is grown 21% to KRW 6.887 trillion (US$6.479 billion) and operating profit booked KRW 338 billion (US$318 million), 265% of year-on-year.

However, the company posted net profit of KRW 25 billion (US$24 million), which is KRW 314 billion lower than a year earlier, due to translation loss of foreign denominated debt and liabilities and decrease in equity method gain of KRW 125 billion from earnings of its subsidiaries in overseas and investment in LG Display.

Mobile Communications Company posted sales of KRW 3.815 trillion (US$3.589 billion), 29.9% up from the second quarter 2008. From handset business, the sales reached KRW 3.514 trillion (US$3.306 billion), 40.8% up from a year earlier.

Shipment of handsets recorded 23 million, 5% growth YoY but declined 17% from the second-quarter, due to slow sales in India and emerging markets. However, operating profit margin in handset division remained at double digit at 11.5% due to growth in high-end models such as "Secret", "Viewty" and variety of QWERTY messaging phones in the USA.

The company said that shipments in the fourth-quarter are expected to grow and achieve 100 million units annual goal, and double digit profitability is expected to be sustained.

Digital Appliance Company sales increased 15.4% to US$3.024 billion on year thanks to steady demands in air conditioners and washing machines in emerging markets despite slowness from economic recession. Operating margin resulted in 4.2%, declined from 5.4% on year due to rise in price of raw materials.

Digital Display Company sales jumped 21.5% to US$3.624 billion powered by rise in sales of flat TVs; LCD TVs 55% and Plasma TVs 10% from a year earlier (revenue base). PDP module sales decreased 7%. Following profitability turnaround in the first quarter, operating profit in the third quarter successfully remained profitable at US$15 million. Sales from Digital Media Company increased 6.6% on year to US$1.039 billion due to steady increase in all products; mainly from set-top-box and security in U.S. market, and BD players and built-in car business. Operating profit and margin increased to US$35 million and 3.3% by strong effort for cost innovation, especially turnaround of car-business.

Posted to the site on 20th October 2008