LG ELECTRONICS REPORTS THIRD QUARTER 2007 EARNINGS RESULTS
LG Electronics (LG), a leader in consumer electronics and mobile communications, announced unaudited consolidated earnings results of the three month period ended September 30, 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 928 per US dollar (2007 3Q), KRW 929 per US dollar (2007 2Q, QoQ), KRW 955 per US dollar (2006 3Q, YoY).
Sales and Profit on global basis Thanks to stable operations from all business divisions, its sales and operating profit recorded increase from a year earlier. Based on LGE global results, sales in the third quarter of 2007 jumped 11.8% to KRW 9.911 trillion (USD 10.680 billion). Operating profit recorded KRW 362 billion (USD 390 million), which makes the profit margin at 3.6%, 1.3% point higher than the previous year.
Mobile Communication Company recorded sales of KRW 2.635 trillion (USD 2.839 billion), 4.0% up from 2006. The company’s shipment of handsets recorded the highest in unit sales, a total of 21.9 million, thanks to increase in emerging markets such as Latin America and Asia/Middle East. Despite increased portion of low end and ASP drop from mainstream models, improvements in cost structure have sustained decent profitability. Operating profit margin reached 8.4% at a stable level over last year. Outlook for a quarter ahead continues bright in mobile handset unit sales and profits, expecting a peak due to seasonality and rise in 3G.
Digital Display Company sales jumped to KRW 3.170 trillion (US 3.416 billion) 18.7% YoY and 16.3% QoQ, powered by rise in sales of plasma and LCD digital TV at 17% QoQ and plasma panels at 21% QoQ. Operating loss reduced to KRW 29 billion (USD 31 million) QoQ primarily due to improvement in PDP modules geared by seasonal demand and new 32 inch line-ups and turnaround in flat panel TVs and monitor business division. Further growth is expected in the fourth quarter in 40 plus inches large flat panel TVs and great demand and popularity of full HD resolution models.
Sales from Digital Media Company increased 9.8% YoY to KRW 1.336 billion (USD 1.440 million) geared by rise in desktop PCs in Korea and notebook PCs overseas. Operating profit and margin posted KRW 29 billion (USD 31 million) and 2.2%, turnaround from a year ago. Shipment of IT products is expected to increase further and higher premium product portion to lead to better profitability in upcoming high-demand season.
Digital Appliance Company sales rose 11.4% to KRW 2.785 trillion (USD 3.001 billion) YoY, but declined 22.7 % QoQ primarily due to low-demand seasonality. Sales in Korean market increased thanks to performance from premium products such as three-door refrigerators, and commercial air conditioners. Steady and remarkable sales of steam drum-type washing machines in US helped achieving overall 14% growth (17% in USD basis) in overseas markets. Despite won appreciation and rise in material costs, growth came from cost innovation and expansion of premium products centered in developed markets such as US. Slowdown in US may be seen in coming quarter due to economic situation like sub-prime, but in other markets the company expects to maintain its strong market position.
Financial statement and Non-operating items on parent basis Parent basis sales and operating profit are KRW 5.690 trillion (USD 6.131 billion) and KRW 92 billion (USD 99 million). Recurring profit and net profit jumped 1169% to KRW 387 billion (USD 417 million), and 1394% to KRW 339 billion (USD 365 million) compared to last year, thanks to equity method gain of KRW 399 billion (USD 430 million) from LG.Philips LCD, its 37.9 % stake owned subsidiary, and overseas subsidiaries