LG Electronics (LG), a leader in consumer electronics and mobile communications, announced unaudited earnings results of the 3-month period ended Sept. 30, 2006. Sales in the third quarter of 2006 jumped 4.5 percent to 6.1 trillion won (approx. U.S. $6.34 billion) from 5.8 trillion won (approx. $6.1 billion) a quarter earlier and 0.6 percent from 6.0 trillion won (approx. $5.8 billion) from the previous year. Operating profit recorded 197.2 billion won (approx. $206.5 million), increased 3.5 percent quarter on quarter and Mobile Communications and Digital Display Company led recurring profit and net profit to turn-around, booking gains of 30.5 billion won (approx. $31.9 million) and 22.7 billion won (approx. $23.7 million) despite an equity method loss from LG.Philips LCD.
Strong sales of plasma panels and plasma and LCD digital TV business led a 18.9 percent jump quarter on quarter in sales of Digital Display business, and sales in Mobile Communications showed quarter on quarter increase of 4.7 percent and 5.3 percent from the handset business, thanks to strong performance in open markets and robust Chocolate phone sales in North America. Exports recorded 4.52 trillion won (approx. $4.74 billion), amounting to 75 percent of total sales.
Mobile Communication Company recorded sales of 2.3 trillion won (approx. $2.41 billion), 4.7 percent higher quarter on quarter and 9.7 percent decrease year on year, and operating profit of 98 billion won (approx. $102 million), a 370 percent increase from 21 billion won (approx. $22 million) quarter on quarter and 23 percent decrease from 128 billion won (approx. $124 million) year on year.
From the handsets business only, revenue rose 5.3 percent to 2.1 trillion won (approx. $2.23 billion) from 2.0 trillion won (approx. $2.1 billion) quarter on quarter. Operating profit recorded 79 billion won (approx. $82 million), 3.7 percent of total revenue and turn-around from loss of 3.0 billion won (approx. $3.15 million) in the previous quarter. Total shipments were 16.5 million units (10.5 million in CDMA, 5.6 million in GSM, 0.5 million in WCDMA), an 8 percent increase from the previous quarter of 15.3 million units and 7 percent increase year on year. Improved shipment in CMDA market to 10.5 million units from 9.1 million units was driven by strong performance in North America geared by Chocolate phones and Korea. Boosts in open markets drove growth in GSM area to 5.6 million units from 4.8 million units. In sales by region, rise in North America of 45 percent from 28 percent the previous quarter was remarkable.
Digital Display Company sales jumped 18.9 percent quarter on quarter and 28.8 percent year on year to 1.7 trillion won (approx. $1.78 billion) with seasonal display. Performance of plasma and LCD digital TV business rose 50 percent quarter on quarter based on shipments. Sales of plasma panels rose 26 percent quarter on quarter with the portion of high definition rising to 70 percent exceeded industry average of 66 percent. The company’s operating profit expanded to 42.6 billion won (approx. $44.6 million) with increase 104.8 percent quarter on quarter and 54.3 percent year on year, primarily due to improvement in product mix to large size digital TVs and cost reduction efforts.
Sales from Digital Media Company increased 2.6 percent quarter on quarter to 658 billion won (approx. $689 million). The business unit achieved this rise in sales despite a decline in average selling price of IT products.
Digital Appliance Company sales rose 4.6 percent to 1.39 trillion won (approx. $1.45 billion) year on year, but declined 11.3 percent quarter on quarter primarily due to increase in raw material cost and seasonally weak season. Sales in Korean market recorded a 12.8 percent increase year on year thanks to performance from premium products such as three-door refrigerators, and steam drum-type washing machines. In air conditioners, increase in cost of copper, one of the key raw materials caused a decline in profit year on year, despite an increase in sales.
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