Arab Today, arab today lg reports profits below estimates
Last Updated : GMT 13:22:27
Arab Today, arab today
Arab Today, arab today

LG reports profits below estimates

Arab Today, arab today

Arab Today, arab today LG reports profits below estimates

Seoul - Arabstoday

LG Electronics Inc., the world’s fourth-largest mobile-phone maker, reported profit that missed analysts’ estimates after sales of its handsets lagged behind models from Samsung Electronics Co. and Apple Inc. Net income rose 47 per cent to 159 billion won ($138 million) in the three months ended June 30, Seoul-based LG said in a statement today. The average of 23 analysts’ estimates compiled by Bloomberg was for a profit of 278.8 billion won. Second-quarter sales totaled 12.9 trillion won, also lagging behind estimates. LG, overtaken by Apple as the world’s No. 3 handset maker last year according to researcher Strategy Analytics, widened its loss from mobile-phone sales during the quarter after giving up market share to Samsung, the world’s largest handset seller, and the iPhone maker. LG is fighting back with new smartphones running Google Inc.’s Android software and with TVs featuring the latest 3-D technology. “Sales figures for phones aren’t rising quickly enough,” Choi Nam Kon, a Seoul-based analyst at Tongyang Securities Inc., said by phone before today’s announcement. “That is forcing them to increase spending on marketing and such, so margins keep narrowing. They need to raise sales volume first.” LG fell 0.5 per cent to 57,000 won on the Korea Exchange as of 1:51 p.m., while the benchmark Kospi index fell 0.9 percent. Operating profit more than doubled to 349 billion won, still missing the 364.7 billion won estimate.? Mobile loss? LG’s mobile division had a second-quarter loss of 56.7 billion won, compared with the 53.9 billion-won loss a year earlier. The analysts surveyed by Bloomberg News forecast a loss of 51.5 billion won. Sales fell 28.5 per cent to 2.32 trillion won. The company said it sold 13.1 million handsets, including basic types, in the second quarter. Dongbu Securities Co. estimated mobile-phone shipments to total 13.2 million units. LG probably sold 5.9 million smartphones in the second quarter, compared with 6.2 million units a year earlier, according to Dongbu. LG plans to ship 30 million to 35 million smartphones this year, focusing on models running on faster next-generation networks using the long-term evolution, or LTE, technology. Increased spending on marketing for new models including the Optimus LTE 2 ate into earnings at the unit, Choi wrote in a June 25 report. A shortage of Qualcomm Inc.’s mobile-phone chips may impede plans to raise production and sales of smartphones this year, Park Jong Seok, head of LG’s mobile-phone business, said in May. LG will sideline development of tablet computers to focus on smaller devices, Ken Hong, a spokesman for the company, said in June.? TV business? The home-entertainment division, which makes TVs, had an operating profit of 216.3 billion won, rising from 97.8 billion won a year earlier. The median of four analysts’ estimates compiled by Bloomberg News was 196.6 billion won. Sales fell 5.8 percent to 5.5 trillion won. LG probably sold about 5.8 million liquid-crystal-display TVs in the second quarter, short of an earlier forecast of 6.2 million, according to an estimate by Tong Yang Securities. LG aims to boost LCD TV sales by about 20 percent to 30 million units this year. Currency-related losses also dragged down margins on TVs, Choi wrote in his June 25 report. Global LCD TV sales will probably grow 5 percent this year. That’s slowing from a 7 percent increase in 2011, according to DisplaySearch, part of NPD Group. Shipments of 3-D TVs, an area where LG is making a push, will jump 74 percent this year, DisplaySearch said. LG aims to become the largest seller of 3-D TVs this year by capturing about 25 per cent of the market, with about 80 per cent of new products to be sold in South Korea having 3-D features, the company said in January.? 3-D TVs? LG is using a 3-D technology called Film Patterned Retarder, or FPR, an alternative to the shuttered-glasses approach used by competitors including Samsung. LG says its polarized glasses are lighter and more comfortable to wear, with less eye strain, than those from South Korean competitor Samsung. The company also plans to start selling TVs using the organic light-emitting diode, or OLED, technology, which measures as thin as 4 millimeters (0.16 inches) and produces sharper images than LCD sets. LG also said it had a 41.7 billion-won loss from its 38 percent stake in LG Display Co. The flat-panel maker will disclose second-quarter earnings tomorrow, with 27 analysts forecasting a 32 billion-won loss, according to the average of their estimates compiled by Bloomberg. The company’s home-appliance division had an operating profit of 165.3 billion won, a 2.6 per cent increase from a year earlier, on 2.9 trillion won in sales. That compares with the 143.5 billion-won median of the four analyst estimates. Higher costs for raw materials, coupled with marketing expenses, hurt margins for the quarter, Choi said. The air-conditioner business had a profit of 70.1 billion won, compared with a 43.7 billion-won profit a year earlier. The median of the four analysts’ estimates was for a profit of 79.8 billion won. Cooler-than-usual weather through April damped demand for air conditioners, Choi said. LG aims to raise air-conditioner sales by more than 10 per cent this year, Noh Hwan Yong, head of the business, said in January. From gulfnews

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