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LG Q1 CE Sales Drop 1.9%

4/19/2005 01:25:00 PM Eastern

Seoul, South Korea — Appreciation of the South Korean won and product price erosion drove down first-quarter sales in the digital display segment at LG Electronics by 1.9 percent to $1.2 billion.

The digital display segment, mainly consumer electronics, relies heavily on exports — $973.5 million in the first quarter — and registered the sales drop primarily due to currency changes against the U.S. dollar.

Operating profit in the CE segment for the three months, ended March 31, was $22.6 million, with a 2.7 percent operating profit margin.

LG reported sales of digital televisions increased 21 percent year-on-year, with plasma TVs increasing by 82 percent and LCD TVs by 70 percent. Sales of PDP modules grew 70 percent in the first quarter, compared with the year-ago period, while sales of display components grew 26 percent.

In total, the CE segment decreased 6 percent year-over-year due to the won appreciation, but increased 8 percent for the three months, compared with the prior year, in U.S. dollar value.

First-quarter sales in LG’s digital appliances segment, including major appliances, declined 5.5 percent in the three months year-on-year, to $1.6 billion. Exports, which accounted for $1.2 billion of this amount, decreased by 15 percent in the quarter, due to won appreciation, relocation of a production base and higher raw materials costs. Operating profit for the segment was $167.2 million in the three months, with a 10.2 percent operating profit margin.

The mobile communications segment at LG, the company’s largest, increased first-quarter sales by 15.6 percent to $2.1 billion, compared with the prior year. Exports accounted for $1.79 billion. Operating profit came in at $100.3 million, with an operating profit margin of 4.7 percent.

Sales of handsets grew 18.8 percent in the first quarter, hitting $1.84 billion, with unit growth rising 27 percent year-on-year, to 11.1 million sets, up 27 percent from a year earlier. In overseas markets CDMA unit sales increased 22 percent in the three months.

Sales in LG’s digital media segment, mainly notebooks and media, dropped 18.8 percent to $831.9 million. Exports decreased year-to-year, again haunted by the effects of currency appreciation and price erosion. Operating profit in the segment was $22.6 million, with a 2.7 percent operating profit margin.

Consolidated LG first-quarter sales essentially were flat, off 0.6 percent to $5.9 billion. The company generated $275.3 million in operating profit in the first quarter, at a 4.7 percent operating profit margin.

Consolidated net profit plunged 86 percent in the three months, down to $81.6 million, from $774.9 million a year ago. This was due primarily to the strong won vs. the dollar, as well as losses attributed to LG.Philips LCD, in which LG has about a 45 percent share of this company’s flat-panel display production. The joint venture, with Philips Electronics, posted a loss of $77.7 million in the first quarter, as prices of panels fell due to overproduction.

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