LG Electronics Reports Third Quarter 2008 Earnings Result
Seoul, Korea, October 20, 2008 - LG Electronics (LG), a leader in consumer electronics and mobile communications, announced unaudited consolidated earnings results of the three month period ended September 30, 2008. 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 1,063 per USD (2008 3Q, QoQ), KRW 1,016 per USD (2008 2Q), KRW 928 per USD (2007 3Q, YoY).
Sales and Profit
Company posted higher-than-expected increase in sales and operating profit in the third quarter both on global and parent basis.
Sales and operating profit on a global basis jumped 21.2% to KRW 12.01 trillion (USD 11.30 billion) and 58% to KRW 571 billion (USD 537 million), which makes the profit margin at 4.8%, 1.2%P higher than a year earlier.
On a parent basis, the increase is even higher; sales is grown 21.0% to KRW 6.887 trillion (USD 6.479 billion) and operating profit booked KRW 338 billion (USD 318 million), 265% of year-on-year. Profit margin was 4.9%, which is 3.3%P higher than the previous year.
However, the company posted net profit of KRW 25 billion (USD 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 (NYSE: LPL, KRX: 034220).
Business performances on a global basis by division are as follows;
Mobile Communications Company posted sales of KRW 3.815 trillion (USD 3.589 billion), 29.9% up from the second quarter 2008. From handset business, the sales reached KRW 3.514 trillion (USD 3.306 billion), 40.8% up from a year earlier. Shipment of handsets recorded 23.0 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 U.S.
Shipment in the fourth-quarter expected to grow and achieve 100 million units annual goal, and double digit profitability is expected to be sustained. “Renoir”, 8-mega pixel camera phone, and the second version of the “PRADA phone by LG” and “Cookie”, a mid-tier full-touch phone will be unveiled in the coming quarter.
Digital Appliance Company sales increased 15.4% to KRW 3.215 trillion (USD 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 KRW 3.852 trillion (USD 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 KRW 16 billion (USD 15 million). Sales from Digital Media Company increased 6.6% on year to KRW 1.104 trillion (USD 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 KRW 37 billion (USD 35 million) and 3.3% by strong effort for cost innovation, especially turnaround of car-business.
About LG Electronics, Inc.
LG Electronics, Inc. (KSE: 066570.KS) is a global leader and technology innovator in consumer electronics, home appliances and mobile communications, employing more than 82,000 people working in 114 operations including 82 subsidiaries around the world. With 2007 global sales of USD 44 billion, LG is comprised of four business units - Mobile Communications, Digital Appliance, Digital Display and Digital Media. LG is the world’s leading producer of mobile handsets, flat panel TVs, air conditioners, front-loading washing machines, optical storage products, DVD players and home theater systems. For more information, please visit www.lg.com.