LG Electronics has biggest quarterly loss in 4 years

LG Electronics has biggest quarterly loss in 4 years
Comment E-mail Print Share
First Published: Thu, Apr 19 2007. 12 40 PM IST
Updated: Thu, Apr 19 2007. 12 40 PM IST
By Kevin Cho/Bloomberg
LG Electronics Inc., South Korea’s second-largest electronics maker, reported its biggest quarterly loss in four years as mounting competition and a glut forced the company to cut prices of television screens.
The net loss was 122.6 billion won ($132 million) in the three months ended 31 March, compared with a profit of 151 billion won a year earlier, Seoul-based LG said in a regulatory filing today. Sales rose 4% to 6.03 trillion won.
The results may stoke speculation that Nam Yong, who was approved last month as chief executive officer, may reorganize or sell the company’s unprofitable plasma division. LG, the world’s second-largest plasma display maker, forecast continued losses at the plasma business this quarter.
LG Electronics was expected to report a first-quarter loss of 33 billion won on sales of 5.76 trillion won, according to the median estimate of 15 analysts surveyed by Bloomberg.
Operating profit, or sales minus the cost of goods sold and administrative expenses, fell 9.3% to 172.9 billion won, exceeding the 76.3 billion won median estimate in the Bloomberg survey.
LG’s display division, which sells flat-screen TVs, posted a loss of 194 billion won, from a profit of 30 billion won a year earlier. The median estimate from the Bloomberg survey predicted a loss of 157 billion won.
Intensifying competition from Japan’s Matsushita Electric Industrial Co., the largest plasma TV maker, coupled with the increasing popularity of rival liquid-crystal display technology, may extend price declines for plasma panels, according to Michael Min, an analyst at Korea Investment & Securities Co. in Seoul. Average first-quarter prices of LG’s plasma panels probably fell 16%, Min said last month.
The mobile-phone division, LG’s biggest business by revenue, reported a profit of 141 billion won in the first quarter, compared with a loss of 31 billion won a year earlier, fueled by sales of its slide-up Shine and Chocolate models. Sales at the business rose 15% to 2.14 trillion won. Analysts estimated profit of 71 billion won on sales of 2.1 trillion won.
LG’s profit from refrigerators and other home appliances rose 37% to 218 billion won on sales of 1.82 trillion won. The division was expected to report a profit of 163 billion won on revenue of 1.6 trillion won, according to the survey of analysts.
Comment E-mail Print Share
First Published: Thu, Apr 19 2007. 12 40 PM IST