LG Electronics: record profits in the third quarter of 2009

Sales of 13.9 trillion Korean won and an operating profit of 850 billion Korean won reward the company's strategy in televisions and mobile phones. The Business Solutions division increases its sales by 2.6% compared to the previous year.

That consumer electronics is being one of the first sectors to push back the crisis is something that has begun to become evident in view of this year's accumulated results. One of the giants of the industry, LG Electronics, today announced the results and operating profits obtained in the third quarter of the year. LG closed the quarter with record sales and operating profits, both at the parent company and globally, for the third quarter through September 30, 2009. Global sales (including the company's subsidiaries) increased 15.7% to 13.9 trillion Korean won (US$11.2 billion), year-over-year. The operating profit was 850 billion Korean won (685 million USD), which represents a margin of 6.1%, 1.3% above what was obtained in the same period of the previous year. Taking the parent company alone, the company posted sales of 7.87 trillion Korean won (US$6.34 billion) and an operating profit of 603 trillion Korean won (US$486 million).

Results by division

The Business Solutions division has announced a 2.6% increase in sales compared to the previous year, reaching 1.21 trillion Korean won (US$973 million) with an operating profit of 25 trillion Korean won (US$20 million). The increase in income at the beginning of the high season is the result of increased demand, which has led to higher sales and stable prices, which have contributed to greater profitability. The forecast for the fourth quarter indicates that both developed markets and emerging markets, in continuous growth, will register a constant increase in demand.

The Home Entertainment division increased its sales in the third quarter by 23.9% to 4.93 trillion Korean won (US$3.97 billion), with a return on investment of 255 trillion Korean won (US$205 million) and a margin of 5.2%, which is 4.4% more than the previous year. These good results are largely due to the increase in demand for flat screen televisions in high season. The division's profitability has increased thanks to sales growth, the structural improvements introduced in plasma screens, as well as the stable profitability recorded by the division's six business areas due to the company's pricing strategy.

The Mobile Communications division achieved sales of 4.65 trillion Korean won (US$3.75 billion), 21.9% more than the previous year, and an operating profit of 390 trillion Korean won (US$314 million) with a margin of 8.4%. In terms of mobile phone sales, the figure reached is 4.38 trillion Korean won (US$3.53 billion), 24.8% more than in the same period in 2008, and operating profit has reached 384 trillion Korean won (US$309 million), which represents a margin of 8.8%.

The Home Appliances division saw an increase of 11.9% to 2.52 trillion Korean won (2.03 billion USD) in the third quarter, compared to the same period of the previous year, while the air conditioning division recorded a decrease in sales of 13.4% in the third quarter, to 851 trillion Korean won (686 million USD), due to the global recession, while the operating margin has obtained a profit of 14 trillion Korean won (11 million USD). Despite the recession and thanks to higher efficiency air conditioning products, the company has seen a significant increase in demand and sales from countries such as Asia, Africa, South America and Central America. LG also expects market share to increase in Korea and the southeastern hemisphere, thanks to the world's most energy-efficient professional air conditioning system (Multi-V Super III), inverter air conditioners located in homes and heat pumps.

Forecasts for the last quarter of 2009

In the middle of the high season for televisions, a slight growth in sales is expected for the next quarter - compared to the same period last year - and on this year's basis compared to the previous year. The reduction in prices in the television and audiovisual device business, and the increase in investment in marketing and R&D, will probably imply lower profitability during the next quarter compared to the same period of the previous year.