LG Elec trumps forecasts on strong phones, TV sales
Wednesday October 21, 2009

SEOUL (Reuters) - LG Electronics Inc's (066570.KS) quarterly profit jumped nearly 50 percent thanks to strong sales of mobile phones and TVs,

LG earned an operating profit of 850 billion won ($733 million) in the third quarter, beating a consensus forecast of 757.8 billion won by analysts polled by Thomson Reuters I/B/E/S. The profit includes LG's foreign affiliates which are important revenue sources for this export-oriented company.

PLAYING CATCHUP FOR LED

LG, which battles Japan's Sony (Tokyo:6758.T - News) for the world's second place in LCD televisions, should have little problem expanding its sales of premium LED televisions, a market so far dominated by Samsung.

"It is just a matter of time. By the second or third quarter of next year, LG should notch up significant sales of LED TVS," said Harrison Cho, an analyst at KB Investments and Securities.

LG sold a record 4.01 million LCD TVs in the third quarter. It also sold a record 31.6 million handsets in July-Sept, up from 29.8 million units sold in April-June.

While profit margin was steady in TVs, LG saw its handset margin slide to 8.8 percent from 11 percent in the previous quarter, as heightened competition pushed the company to spend more on marketing.

Last week, Nokia reported its worst results, hit by a major writedown and as it lost market share in smartphones.

LG benefited from strong sales of flat-screen TVs and record operating profits at affiliate LG Display Co Ltd (034220.KS).

The company was cautious on the outlook.

"Entering the peak season for TV, modest sales growth is expected (in the fourth quarter)," LG said in a statement.

"Price erosion in the TV and handset business and an increase in marketing/R&D investment will likely result in lower profitability."