LG bullish on growth after resilient Q1 - Mobile World Live

LG bullish on growth after resilient Q1

23 OCT 2009

South Korea’s LG Electronics posted a resilient set of first-quarter results today for its mobile communications division, increasing its Q1 sales and targeting double-digit handset growth next quarter despite its own projections of the global device market declining over 10 percent year-on-year in the same timeframe. The world’s third-largest mobile device manufacturer reported a 16.8 percent increase in handset and network equipment sales in Q1 compared to the previous year, with revenues of KRW4.25 trillion (US$3.15 billion). Operating profit fell to KRW255 billion from KRW457 billion a year earlier. The company sold 22.6 million handsets in the first quarter, slightly down from 25.7 million units in the fourth quarter, and a 7.7 percent decline year-on-year. Handset sales accounted for KRW3.92 trillion of the total KRW4.25 trillion in revenue, up 22.6 percent year-on-year. The mobile group’s total operating margin rose to 6 percent from 3.9 percent.

“Sales remained strong in mid-tier models such as Cookie, a full touch screen phone, and LG-KS360, a QWERTY keypad messaging phone, among others,” said the company in a statement. LG expects the global handset market to decline over 10 percent year-on-year to around 260 million unit shipments in the second quarter, but the company stressed it is “targeting over 10 percent growth QoQ by focusing on high-tier, feature-rich products such as Arena, with a new S-Class UI, messaging phones such as Xenon and Neon, Viewty Smart, an 8-megapixel camera phone and GD900, with a transparent keypad.” LG is considered to be a vendor on the rise in the mobile handset space, with Gartner recently stating that it outperformed the majority of its rivals in Q4 last year by increasing its global device market share to 8.9 percent. “LG’s strong performance is the result of an efficient rationalisation of its portfolio around high-margin devices,” Wireless Intelligence senior analyst Joss Gillet told Mobile Business Briefing today. “But it is mainly helped by the fact that some competitors are falling apart, especially in North America.” Meanwhile, as a group, LG Electronics posted a net loss of KRW197.6 billion, reversing a net profit of KRW422.2 billion a year earlier. On a parent basis, it posted an operating profit of KRW437.2 billion from KRW564.2 billion, while sales rose 2.1 percent to KRW7.074 trillion from KRW6.927 trillion a year earlier.

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