SEOUL, South Korea LG Electronics Co. Ltd. reported lower fourth-quarter total sales from a year earlier due mainly to a strong local currency and expenditures for expanding overseas production, but saw higher profits in all business divisions other than digital displays.
In an unaudited regulatory filing, the country’s No. 2 electronics market player said total sales during the fourth 2005 quarter reached $6.18 trillion won ($6.3 billion), down 5.2 percent from $6.5 trillion won a year ago.
The company posted an operating profit of 211.1 billion won ($215.4 million) in the quarter, a whooping 122.4 percent rise year-on-year from 94.9 billion won, but down 24.6 percent quarter-on-quarter from 279.9 billion won. It also enjoyed a net profit almost doubled to 312.2 billion ($318.6 million) from 163.4 billion a year earlier and 156.9 billion won in the third quarter.
But profits fell quarter-on-quarter in display products-- TVs, monitors-- due to sharp price declines, while handset profits offset the lackluster results with the help of new products and strong sales of WCDMA items, according to the report.
Mobile communication division sales grew 5.3 percent quarter-on-quarter to 2.67 trillion won with a 8.1 percent operating margin to 217 billion won, a 70.2 percent jump from the previous quarter. Handsets sales rose 6.9 percent to 2.4 trillion won with another 8.1 percent operating margin to 198 billion won, up 60.7 percent from the previous quarter.
CDMA shipments rose 5 percent in South Korea, fell 6 percent overseas and improved ASPs geared sales in GSM to North American operators, Europe and CIS markets. WCDMA shipments also increased 86 percent quarter-on-quarter. The successful launch of a black-label CDMA phone model and slim 3G models helped improve profitability.
In fiscal 2005, LG Electronics posted 23.77 trillion won ($24.26 billion) in total sales, down 3.6 percent from 24.66 trillion won in 2004, with a net profit of 702.8 billion won ($717.1 million), down from 1.5 trillion won. But the company’s total global sales, including overseas subsidiaries, rose to 35.55 trillion won in 2005 from 35.29 trillion won the previous year.
For 2006, LG expects sales of 24.0 to 24.5 trillion won on a non-consolidated basis, with global sales of 38.5 to 39.0 trillion won, according to the report.
The company has set aside 2.5 trillion won ($2.6 billion) for investment this year with 1.1 trillion won to be used for facilities and the remaining 1.4 trillion won to go to R&D. Capital investment includes expanding on constructing new plasma production lines and reinforcement of R&D institutes.