LG Electronics posts 15% yearly growth for 3Q09 revenues

LG Electronics (LGE) has reported a 15.7% increase on year for its third-quarter consolidated revenues to 13.9 trillion won (US$11.2 billion). Consolidated operating profit were 850 billion won with a 6.1% margin.

The parent company recorded revenues of 7.87 trillion won and an operating profit of 603 billion won for the third quarter.

The home entertainment company saw third-quarter revenues rise by 23.9% on year to 4.93 trillion won, a profit of 255 billion won for a margin of 5.2%, as a result of strong product leadership and rising demand for flat panel TVs amid the peak season. Profitability increased due to higher sales, structural improvements in the plasma display panel (PDP) business and generally stable profitability in all six business divisions in the home entertainment company as a result of its cost competitiveness drive.

The mobile communications company reported 4.65 trillion won in revenues, up 21.9% on year, and an operating profit of 390 billion won with a margin of 8.4%. Handset revenues accounted for 4.38 trillion won, up 24.8% on year, and operating profit reached 384 billion won, resulting in a margin of 8.8%. Handset shipments saw an increase of 37% on year and 6% sequentially to 31.6 million units due to robust growth in emerging and European markets, despite a slight decline in unit sales in North America and Korea. Price erosion, along with increased sales of low-end handsets, resulted in lower profitability compared to the second quarter.

The home appliance company posted an increase of 11.9% on year to 2.52 trillion won in the third quarter. Recovery of demand in emerging markets contributed to this yearly growth. The company's product competitiveness resulted in an operating margin of 6.7%, at 170 billion won. Despite an increase in marketing expenses, higher sales in emerging markets and ongoing cost reduction generated a higher margin on a yearly basis. In the fourth quarter, market demand for durable goods is expected to pick up in emerging countries such as China and India.

For its non-operating items on the parent company basis, LGE recorded a profit of 1.03 trillion, a net profit of 807 billion won, and a margin of 10.3%. Foreign exchange gain of 71 billion won and equity method gain of 368 billion won from overseas subsidiaries and affiliates helped push up net profit. In particular, LG Display, in which LGE owns a 37.9% stake, booked an equity method gain of 210 billion won.

For the fourth-quarter peak season for TV, modest sales growth is expected both on a quarterly and yearly basis. Price erosion in the TV and handset business and an increase in marketing and research and development investment will likely result in lower profitability sequentially.