Net Profit Turns to Black with High-End Products,
Aggressive Cost Cutting, and Improved Investment Income from Affiliates
Karachi, August 02,
2011 – LG
Electronics (LG) announced unaudited consolidated financial results based on
IFRS (International Financial Reporting Standards) for the three-month period
ending June 30, 2011. The turnaround in net profit reflected steady
improvements in its businesses and successful cost-reduction efforts, in line
with analysts’ estimates.
LG posted consolidated second quarter 2011 revenues of KRW
14.4 trillion (USD 13.3 billion) a 9.3 percent increase from the previous
quarter. After two consecutive quarters of losses, LG turned the corner with a
net profit of KRW 108 billion (USD 99.6 million). LG reported an operating
profit of KRW 158 billion (USD 145.8 million) this quarter, a 21 percent
increase from the previous quarter and a 25 percent increase from the previous
year, thanks to higher profitability for the TV business and reduced losses in
handsets.
LG Home Entertainment Company posted a quarter-over-quarter
sales increase of 2.7 percent to KRW 5.4 trillion (USD 5.0 billion) thanks to
higher revenues from LED LCD TVs, its new CINEMA 3D TVs and general business growth
in developing markets. The HE Company posted a KRW 90 billion (USD 83.0
million) operating profit in the second quarter, a 10 percent increase over the
previous quarter as a result of better product mix and cost controls. The
company expects to see sales continue to rise with the anticipated strong
consumer acceptance of its film patterned retarder (FPR) CINEMA 3D TVs as well
as smart TVs.
LG Mobile Communications Company reported an 11.6 percent
increase in sales in the second quarter compared to the previous quarter, to
KRW 3.25 trillion (USD 3.0 billion). While recording a loss of KRW 54 billion
(USD 49.8 million), operating income showed strong improvement, reducing losses
from the previous quarter by almost half. The company continues to strengthen
its global competitiveness by launching a mix of competitive smartphones and
its continued investment in R&D.
LG Home Appliance Company posted record-high quarterly sales
of KRW 2.9 trillion (USD 2.7 billion) from April to June 2011, a 6.9 percent
increase from the previous quarter and a 6.0 percent increase year-over-year,
primarily due to strong sales in emerging markets. Although revenue grew and
product offerings improved, operating profit of KRW 51 billion (USD 47.1
million) reflected an increase in raw material costs, appreciation of the
Korean won and greater market competition. The Home Appliance Company intends
to maintain its market leadership by introducing more energy-efficient and
“smarter” products in the second half while continuing to control costs.
LG Air Conditioning and Energy Solution Company grew its
second quarter revenues by 29.2 percent quarter-over-quarter and 15.3 percent
year-over-year to KRW 1.9 trillion (USD 1.7 billion) by focusing on product
quality and launching new products with superior features. The company posted a
KRW 44 billion (USD 40.6 million) operating profit, a 13 percent increase
quarter-over-quarter. Operating profit margin was 2.3 percent in light of
higher raw material costs and unfavorable foreign exchange rates. Although the
market is entering its slow season, the company still expects demand to
increase in key strategic regions.
2011 3Q Business Direction and Prospects LG Electronics
expects to see modest growth year-over-year in the third quarter of 2011 with
new product launches in major categories and creative marketing activities
across its various 3D products. For the long-term, the company will continue to
strengthen profitability through aggressive cost innovation and strategic
investments in existing as well as new business areas. ***
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