LG Electronics Q2 '08: Record Sales & Profits

July 22, 2008

LG Electronics reported unaudited consolidated earnings results of the three month period ended June 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 1,016 per USD (2008 2Q), KRW 955 per USD (2008 1Q, QoQ), KRW 929 per USD (2007 2Q, YoY).

Sales and Profit

LG continued replacing its record-high quarterly sales and operating profit on both global and parent basis, thanks to stable operations from all business divisions, mainly from robust sales in handsets and flat panel TVs.

On a global basis, sales jumped 22.1% to KRW 12.735 trillion (USD 12.534 billion) and operating profit recorded KRW 856 billion (USD 843 million), which makes the profit margin at 6.7%. On a parent basis, second-quarter sales rose 22.5% to KRW 7.234 trillion (USD 7.120 billion). Operating profit booked KRW 635 billion (USD 625 million) with the profit margin of 8.8%. The company posted strong net profits of KRW 707 billion (USD 696 million), as equity method gains 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 the company’s another record-high sales of KRW 3.849 trillion (USD 3.788 billion), 34.3% up from the second quarter 2007. From handset business, the sales reached KRW 3.754 trillion (USD 3.695 billion), 38.6% up from a year earlier. Operating profit margin improved to 13.9%, 14.4% in handset division due to growth in high-end models and improvements in operational efficiency. Shipment of handsets also recorded the highest in unit sales as well, a total of 27.7 million mainly from North America (33%) and emerging markets including Middle East Asia, CIS and Central & South America, thanks to strong sales of “Secret”, “Viewty”, “Venus” and other premium phones. Secret is the third model in its Black Label Series, with highly stylish design and enriched technological features including the slimmest 5 megapixel camera and innovative materials.

Digital Appliance Company sales increased 4.9% to KRW 3.781 trillion (USD 3.721 billion) on year and operating margin resulted in 7.2% despite challenging business environment such as higher raw material prices, economic slowdown and US market contraction from sub-prime effect.

Digital Display Company sales jumped 37.2% to KRW 3.742 trillion (USD 3.683 billion) powered by rise in sales of flat TVs; LCD TVs 86%, Plasma TVs 31% from a year earlier. PDP module sales grew 22%. Following profitability turnaround in the previous quarter, operating profit in the second quarter successfully remained profitable at KRW 38.0 billion (USD 37.4 million).

Sales from Digital Media Company reduced 2.1% on year to KRW 1.220 trillion (USD 1.201 billion) due to low seasonality, but operating profit and margin increased to KRW 13.0 billion (USD 12.8 million) and 1.0% by strong effort for cost innovation.