LG: Solid Performance in Appliances Offsets Difficult Quarter in Mobile Phones
Aug 9, 2012
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LG Electronics (LG) reported a 46% increase in net profits for the second quarter of 2012 versus the second quarter of 2011. Stronger performance in home appliances and home entertainment compared to 2Q 2011 helped offset profit declines in the company's mobile business.
A combination of more premium products, a strategic focus on developing markets, and aggressive cost reductions, second-quarter net profit increased 46% year-over-year to KRW 159 billion (approx. US$138.02 million). Operating profit more than doubled to KRW 349 billion (approx. $302.95 million) from 2Q 2011.
Revenues were 5.2% higher than in the first quarter of 2012 but declined from 2Q 2011 by 10.6% to KRW 12.86 trillion (approx. $11.16 billion) - a decline blamed on decreasing feature phone sales and weak demand for IT products.
LG Home Appliance Company saw its 2Q 2012 operating profit nearly triple to KRW 165 billion (approx. $143.23 million) from 2Q 2011 thanks to a better product mix and improved cost efficiency. Revenues increased year-over-year to KRW 2.88 trillion (approx. $2.50 billion) from growth in developing markets. LG said it still expects improved results in the second half of 2012 compared to 2H 2011, despite ongoing weak demand in developed markets.
LG Air Conditioning and Energy Solutions Company had operating profit of KRW 70 billion (approx. $60.76 million), up 17%. Revenues were up 21% from 1Q 2012 but down from 2Q 2011 to KRW 1.47 trillion (approx. $1.28 billion). The decrease was attributed to weak residential air-conditioner sales in Korea and low demand in developed markets. Profitability improved year-over-year, led by higher contributions from system air-conditioner sales. The company will focus on improving profitability by introducing more energy-efficient products and by accelerating growth in its commercial air-conditioner systems business.
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