LG ELECTRONICS REPORTS FIRST QUARTER 2007 EARNINGS RESULTS
LG Electronics (LG), a leader in consumer electronics and mobile communications, announced unaudited earnings results of the three month period ended March 31, 2007. Amount in Korean Won (KRW) are translated into US dollars (USD) at the average rate of three month period in each quarter, which was KRW 939 per US dollar (2007 1Q), KRW 938 per US dollar (2006. 4Q, QoQ), KRW 977 per US dollar (2006. 1Q, YoY).
To accommodate comprehension of LG’s global business, the company released financial earnings in parent format plus additional consolidated earnings of each division and overseas subsidiaries.
Sales and Profit
For the quarter, the company posted a revenue of KRW 6.03 trillion (USD 6.43 billion) on a parent basis, increased by 4.0% from a year earlier thanks to robust sales of premium handsets and home appliances. On a consolidated basis which includes sales of LG’s overseas subsidiaries, revenue reached KRW 9.59 trillion (USD 10.22 billion), increased by 8.3% from the previous year.
Operating profit was KRW 173 billion (USD 184 million) on a parent basis with a margin of 2.9% compared to KRW 191 billion (USD 204 million) from a year earlier primarily due to a sluggish display and media business in spite of a remarkable turnover in mobile business and solid performance of appliance business. Situation on a consolidated basis was KRW 28 billion (USD 29.4 million) hurt by overseas subsidiaries’ operating loss of KRW 133 billion (USD 142 million).
Net Profit was a loss of KRW 123 billion (USD 131 million) on a parent basis mainly due to loss in equity method of KRW 193 billion (USD 205 million) from LG.Philips LCD and overseas subsidiaries.
Consolidated performances by business division are as follows;
Mobile Communication Company recordedsales of KRW 2.51 trillion (USD 2.67 billion), 14.7% higher than a year earlier. Revenue from the handset business rose 17.8% to KRW 2.35 trillion (USD 2.50 billion) from KRW 2.00 trillion (USD 2.05 billion). Consolidated sales based total shipments were 15.8 million units, compared to 14.1 million units YoY and 17.9 million units QoQ. Success of ‘Shine’ phone and DMB line-ups in Korea pushed up shipments 46% QoQ, and continued high demand of premium ‘Chocolate’ phone in GSM open-markets led a shift of 28% QoQ. Strong growth in WCDMA phones sales was realized in Korea and the United States. Operating margin was 4.7%, a bit less than 6.6% on a parent basis, but recovered from a loss of 2.6% from the first quarter of 2006.
Digital Appliance Company sales rose 15.1% to KRW 2.94 trillion (USD 3.13 billion) from a year earlier, thanks to growth in premium product lines. Improvement of an operating profit was remarkable. KRW 169 billion (USD 17.9 million) was 43.6% higher than a year earlier and 37.1% from the previous quarter. Operating margin increased 1.1% point to 5.7% despite won appreciation and rise in material costs. On a parent basis the margin rose 1.8% point to 12.0%.
Digital Display Company sales including plasma display panels and flat panel TVs and monitors rose 1.5% to KRW 2.75 trillion (USD 2.93 billion) from the previous year, but posted an operating loss of KRW 262 billion (USD 2.79 million). Sales from Digital Media Company’s media and IT products posted KRW 1.38 trillion (USD 1.47 million), 4.7 % down from a year earlier. Slow in display and media business stems from seasonality plus intensified price erosion, but mainly due to lower efficiency in capacity of plasma display panels.