LG Electronics Profit Plunges 91% Amid Stagnant TV Demand
Net income dropped to 22.1 billion won ($20 million) in the three months ended March 31 from 247.5 billion won a year earlier, Seoul-based LG said in a statement today. That was well below the 208.7 billion-won average of 23 analyst estimates compiled by Bloomberg.
Operating profit fell to 349.5 billion won from 401.7 billion won a year earlier, LG said. Total sales increased to 14.1 trillion won from 13.2 trillion won, helped by a better performance at the company’s mobile phone business.
Profit at the TV-making unit declined from a year earlier as demand for plasma-display sets decreased, LG said. LG, which trails Samsung Electronics Co. (005930) in TV shipments, has said it plans to increase deliveries 15 percent this year by offering sets with new display technologies and more advanced functions.
“LG lagged behind Samsung in the high-end TV race while it also was pressured by some players like Vizio in the lower-end category, forcing it to cut prices,” Kwon Sung Ryul, a Seoul- based analyst at Dongbu Securities Co., said before the earnings release. “A strong TV rebound isn’t likely this year. Only about a low-single percentage growth is expected at best.”
LG fell 0.4 percent to close at 90,000 won in Seoul trading Today, compared with a 0.9 percent gain in South Korea’s benchmark Kospi index. The shares have gained 22 percent this year.
The company’s Chief Financial Officer, David Jung, said in Seoul that the consumer electronics maker will see higher sales and improved operating profit in the second quarter, mainly driven by new smartphone and TV product releases. “For the full year, we will sell about 45 million smartphones,” Jung said. In 2012, LG sold 26.3 million smartphones.
LG said Jan. 2 it started selling a 55-inch TV set with a display using organic light-emitting diodes, or OLEDs, in South Korea for 11 million won, giving the company a head start in mass-marketing the technology. The company will expand OLED TV sales to North America, Europe and other Asian markets in the first quarter, it said at the time.
Suwon, South Korea-based Samsung said Feb. 19 it aims to start selling OLED TVs in the first half of this year.
TVs with OLED screens offer sharper and brighter images than current liquid-crystal-display models and consume less power. They are also thinner as they don’t require the use of a backlight.
Worldwide shipments of LCD sets, the biggest TV segment, fell for the first time in 2012, NPD Group Inc.’s DisplaySearch said on March 21. The global average selling price for flat- panel TVs declined 2 percent, the Santa Clara, California-based researcher said.
Global deliveries may increase 7 percent to 216 million units in 2013, DisplaySearch said on March 13.
LG shipped 10.3 million smartphones including its flagship Optimus (MLOPT) models in the first quarter, boosting revenue from the business 29 percent from a year earlier, the company said. Operating profit at the unit increased almost fourfold to 133 billion won.
LG released its upgraded flagship smartphone, the Optimus G Pro, in South Korea on Feb. 20 as it seeks to regain market share lost to Apple Inc. and Samsung. LG also is rolling out a cheaper Optimus series to compete with fast-growing Chinese manufacturers.
The Optimus G Pro features Google Inc. (GOOG)’s Android operating system, a Qualcomm Inc. (QCOM) quad-core processor and a 13-megapixel rear-facing camera. The device also has a function that lets users record from the front and rear cameras simultaneously.
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