LG Profits Top 92.8%
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LG Electronics the world’s fourth-largest maker of cellular phones, said Wednesday first-quarter profit soared on a turnaround in the business results of LG.Philips LCD Co.

LG Electronics said profit rose 92.8 percent to 160.4 billion won ($170 million) in the three months ended March 31 from the same period the year before, the company said in a statement. LG Electronics is the largest shareholder in LG.Philips LCD Co., one of the world’s two top makers of liquid-crystal displays, which reported earlier this month that it returned to profit in the first-quarter on increased demand for flat screens used in televisions and personal computers.

LG Electronics’ result was better than expected. The average estimate of eight analysts surveyed by Dow Jones Newswires forecast that the company would post a profit of 120 billion won ($127 million). Sales during the quarter fell 2.7 percent to 5.8 trillion won ($6.1 billion).

Chief Executive Officer Kim Ssang Su, 61, is trying to keep pace with Nokia Oyj and Motorola, the world’s two largest mobile phone makers, as they drive down handset prices to grab market share in emerging markets such China and India. LG is also counting on increased demand for its flat-panel televisions to help buoy earnings.

Sales fell 2.7 percent to 5.8 trillion won from 6 trillion won. LG Electronics was projected to report net income of 152 billion won, operating profit of 184 billion won, and revenue of 5.8 trillion won, according to the median estimates of eight analysts surveyed by Bloomberg.

LG.Philips LCD Co., the world’s second-largest maker of liquid-crystal displays, last week reported first-quarter profit of 48 billion won, compared with a 79 billion won net loss a year earlier, as demand for large-screen TVs increased ahead of soccer’s World Cup.

Mobile Phones

The mobile-phone unit, LG’s biggest division, had a record operating loss of 31 billion won, compared with profit of 67 billion won a year earlier. The division was expected to break even in the first quarter, according to the Bloomberg survey of analysts. Handset sales were 1.8 trillion won, short of the 1.9 trillion won median estimate in the Bloomberg survey.

LG’s average handset prices declined 23 percent to $127 during the quarter, according estimates by UBS AG analyst Seung Shin in an April 13 report.

The company’s previous worst earnings performance in mobile phones was during the second quarter of last year, when LG posted a 4 billion won loss from handsets.

In January, the company forecast its mobile-phone shipments will rise 27 percent to 70 million units this year.

Flat-Screen TVs

Profit at LG’s display division, which includes the company’s plasma TV panel business, rose to 30 billion won from 17 billion won a year earlier, while sales climbed to 1.4 trillion won. The division’s profit was expected to climb to 20 billion won on sales of 1.3 trillion won, according to the Bloomberg survey.

Shipments of plasma panels at LG, the world’s third-largest maker of the product, jumped 81 percent during the quarter, offsetting the 16 percent drop in prices, according to estimates by Lehman Brothers Holdings Inc. analyst James Kim in an April 14 report.

Profit from appliances fell to 160 billion won from 170 billion won a year earlier, while sales dropped to 1.6 trillion won from 1.7 trillion won. The division was expected to post profit of 141 billion won on sales of 1.6 trillion won, according to the Bloomberg survey.