LG Electronics reports third quarter 2008 earnings results

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 $11.30bn and 58% to $537m, 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 $6.479bn and operating profit booked $318m, 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 $24m, which is lower than a year earlier, due to translation loss of foreign denominated debt and liabilities and decrease in equity method gain of $120m from earnings of its subsidiaries in overseas and investment in LG Display (NYSE: LPL, KRX: 034220).

The Managing Director of LG Electronics Levant Jordan, Mr. Kevin Cha, said:

"LGE sales and performance in continuously mounting, due to the new products that we innovate to meet the demands of our customers around the globe. It is our endeavour to constantly fuel the market with elegantly designed and innovative products, and that has enabled us to maintain leading market status in terms of sale."

Business performances on a global basis by division are as follows:
Mobile Communications Company posted sales of $3.589bn, 29.9% up from the second quarter 2008. From handset business, the sales reached $3.306bn, 40.8% up from a year earlier. Shipment of handsets recorded 23.0 million, 5% growth year on year 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 $3.024bn 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 $3.624bn 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 $15m.

Sales from Digital Media Company increased 6.6% on year to $1.039bn 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 $35m and 3.3% by strong effort for cost innovation, especially turnaround of car-business.