LG Electronics Inc. has swung to a quarterly profit from a year-earlier loss on record sales of mobile phones. However, its latest earnings were half those of the preceding 3 months because of decreasing flat-screen prices.
The world's fifth largest cellphone maker, enjoying healthy demand for its pricey third-generation (3G) handsets, forecast its phone sales would rise as much as 40 percent this year, but its shares fell 3.6 percent on concerns over its broader outlook.
"Handset sales are the driver of earnings, and I expect sales to continue to be strong, although it will be hard for LG Electronics to improve significantly from the fourth-quarter numbers," said Yoo Jiyong, a fund manager at CJ Investment Trust Management. "My main concern about LG is in flat-screen prices, and we are going to have to closely monitor these. Market expectations are for prices to bottom by the second quarter, but there is nothing certain about this."
LG, which competes with Samsung Electronics in phones, televisions, and refrigerators, earned a net profit of 143.6 billion won (approx. U.S. $138.3 million) for its fourth quarter, beating analysts' consensus forecast for 126 billion won (approx. $122.1 million), due mainly to lower corporate taxes. In the same period a year earlier, the company had suffered a loss of 17 billion won (approx. $16.5 million) on hefty restructuring charges at its TV tubes unit.
Sales rose by a fifth to 6.5 trillion won (approx. $6.3 billion) in the quarter under review, and the company said it was targeting 2005 sales of 28 trillion won (approx. $27.1 billion) to 30 trillion won (approx. $29.1 billion), up from 24.7 trillion won (approx. $23.9 billion) in 2004.
For the whole of 2004, LG more than doubled its profits to 1.53 trillion won (approx. $1.5 billion), but earnings are expected to fall 12 percent to 1.35 trillion won (approx. $1.3 billion) this year Reuters estimates showed. (Reuters, biz.thestar.com)
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