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LG Electronics’ profit soars, sales rise

Wed, 10/21/2009 - 8:05am
Kelly Olsen, AP Business Writer

SEOUL, South Korea (AP) – LG Electronics said third-quarter net profit soared, helped by earnings from its display affiliate, while revenue rose on record sales of flat-screen TVs and mobile phones.

The company, the world's second-largest manufacturer of flat-screen TVs, earned 807.2 billion won ($684 million) in the three months ended Sept. 30, it said in a regulatory filing Wednesday. It posted net profit of 24.9 billion won a year earlier.

Sales during the quarter rose 14 percent to 7.87 trillion won from 6.89 trillion won a year earlier. The sales figure was the highest ever for a third quarter, the company said.

But looking ahead, LG Electronics said it expects modest sales growth in the fourth quarter. It said lower prices for TVs and mobile phones and an increase in marketing costs and investment in research and development would likely hurt profitability compared with the previous quarter.

Boosting the bottom line was a 368 billion won "equity method" gain from overseas subsidiaries and its display affiliate, the company said. An equity method gain or loss is the positive or negative earnings contribution from related companies. The company also booked a foreign exchange gain of 71 billion won.

LG Electronics owns a 37.9 percent stake in LG Display Co., the world's second-largest manufacturer of liquid crystal displays used in flat-screen televisions and other products. LG Display said last week that net profit soared on record sales and cost cuts amid a recovery in prices for flat panels.

Seoul-based LG Electronics said that sales at its home entertainment company rose 24 percent to 4.93 trillion won amid "rising demand for flat-panel TVs amid the peak season." LG, maker of the Borderless flat-panel TV, sold a quarterly record 4.01 million liquid crystal display TVs, said company spokesman Jang Joon-kyu.

LG Electronics is also the world's third-largest seller of mobile phones after Finland's Nokia Corp. and South Korea's Samsung Electronics Co.

The maker of the Cookie, New Chocolate and Crystal mobile phones said sales increased 37 percent in the third quarter from the same period last year – to a record 31.6 million handsets.

Shares in LG Electronics, which released earnings during early afternoon stock trading, rose 1.7 percent to close at 120,500 won. The company's share price has risen 61 percent so far this year.

LG also reported higher home appliance sales on a recovery in demand in emerging markets. Air conditioner sales, however, declined amid the global downturn.

On a global basis including overseas subsidiaries, LG said that sales rose 15.7 percent to 13.9 trillion won, while operating profit increased 49 percent to 850 billion won. The company does not provide a global net profit figure.

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