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LG Q2 CE Sales Fall

7/18/2005 12:52:00 PM Eastern

Seoul, South Korea — Product price erosion, a 6.4 percent decline in exports and appreciation of the South Korean won pushed down second-quarter sales 2.3 percent in the digital display segment at LG Electronics, to $1.11 billion from a year-earlier $1.14 billion.

The digital display business, mainly consumer electronics, came in with an operating loss of $21.2 million in the second quarter, ended June 30, compared with an operating profit of $39.5 million in the same three months in 2004.

Sales of digital televisions, led by flat-screen displays, jumped 42 percent in the second quarter, thanks to an 80 percent rise in PDP-TV sales, on improving supply and demand and a 192 percent increase in sales of LCD televisions.

Second-quarter sales in LG’s digital appliance segment, which includes major appliances, dropped 5.9 percent year-on-year, reaching $1.56 billion, down from $1.66 billion. Exports were off 25 percent in the three months. However, the company expects the North American brand business to expand during the rest of 2005, due to recent entry into Home Depot stores.

The majap segment operating profit dipped to $156.1 million in the second quarter, down from a year-ago $165.8 million.

The mobile communications segment at LG saw revenue decrease by 5.1 percent in the second quarter, down to $2 billion from a year-earlier $2.1 billion. Sales of handsets dropped by 5 percent, due to fierce competition leading to lower average sale prices, while profit decreased mainly due to several non-recurring cost items. Handset shipment rose 22 percent to 12.1 million. Operating profit for mobile business was $7.7 million in the segment’s second quarter, compared with $140.7 million in the same three months the previous year.

Sales in LG’s digital media business, primarily notebooks and media, decreased 18.1 percent in the second quarter, hitting $705.5 million, off from a year-on-year $862.6 million. The decrease was due to market contraction and stiff competition. Operating profit for the three months came in at $26 million, about half the $48.2 million registered year-over-year.

Consolidated sales at LG declined 6.9 percent in the second quarter, reaching $5.4 billion, down from a year-ago $5.8 billion. Net profit dropped to $145.5 million, compared with $475.1 million in the same period in 2004. The 69.5 percent slide in net profit was attributed primarily to lower average selling prices for cellphones and flat-screen TVs, which adversely affected profitability.

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