LG reports $128 million loss in mobile division

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2014

LG Electronics (LG) yesterday, 27 October 2011 announced unaudited consolidated financial results based on IFRS (International Financial Reporting Standards) for the three-month period ending September 30, 2011.

LG has reported a $128 million loss in mobile communications (image source: file photo)

Global economic conditions affected overall sales in the quarter, while losses on investments in affiliated companies led to a quarterly net loss. However, due to cost controls and efficiency improvements, operating income improved for all four companies compared with the same period last year.

Sales and Profit

LG posted consolidated third quarter 2011 revenues of KRW 12.9 trillion (USD 11.92 billion) a 4% decrease from the same period last year. The company reported an operating loss of KRW 32 billion (USD 29.57 million) versus a third-quarter 2010 operating loss of KRW 185 billion (USD 156.12 million). The KRW 414 billion (USD 382.62 million) net loss in the quarter was mainly due to a loss on investments in affiliated companies and net financial expense.

LG Home Entertainment Company shipped 6.8 million flat panel TVs from July to September, the most ever in the third quarter. Revenues decreased 7% from the previous year to KRW 5.37 trillion (USD 4.96 billion) as a result of weaker consumer sentiment in the global market. Operating profit improved 17% over the previous quarter to KRW 101 billion (USD 93.35 million) due to a stronger premium product mix of CINEMA 3D TVs and LED LCD TVs.

LG Mobile Communications Company sales decreased 8.5% year-on-year to KRW 2.76 trillion (USD 2.55 billion). The company posted an operating loss of KRW 139 billion (USD 128.47 million). LG plans to continuously focus on the smartphone business and increase sales of LTE (Long Term Evolution) handsets with the launch of the Optimus LTE to drive sales and profit improvements in the quarters ahead.

LG Home Appliance Company posted sales of KRW 2.7 trillion (USD 2.5 billion) in the third quarter, a 1% increase from the same period the year before, thanks to strong sales in emerging markets along with the growth of more energy-efficient and smarter products. Despite an increase in raw materials prices and appreciation of the Korean won, the company still managed to improve operating profit by 11% to KRW 70 billion (USD 64.7 million) from the same period the year before.

LG Air Conditioning and Energy Solution Company grew its third quarter revenues by 11% year-over-year due in large part to strong sales in Korea, the Middle East and Latin America. The company posted an operating profit of KRW 1 billion (USD 0.92 million) in a traditionally slow season for air conditioners. Although overall demand is expected to decline in the coming quarter, the company will continue to increase sales of commercial air conditioners, chillers and heaters with the introduction of more energy efficient products.

2011 4Q Business Direction and Prospects

LG Electronics expect to see modest growth in the coming months with competitive LTE smartphones, CINEMA 3D TVs and consumer-friendly, energy efficient appliances. The company will also focus on strengthening profitability through more aggressive cost control and better allocation of resources.

2011 3Q Exchange Rates Explained

LG Electronics unaudited earnings results are based on IFRS. Amounts in Korean won (KRW) are converted into US dollars (USD) at the average rate of the three month period in each corresponding quarter: KRW 1,082 per USD (2011 3Q) and KRW 1,185 per USD (2010 3Q).

Staff Writer

1 COMMENT

  1. Interesting news for LG, I’m sure the next quarter will be brighter. The consumer electronics sector is brutal, but I cant see a established brand like LG being on the ropes for too long

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