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LG Reports Higher Q3 Sales, Earnings

10/20/2006 11:31:00 AM Eastern

Seoul, South Korea — LG Electronics reported higher sales and earnings for the third quarter ended Sept. 30.

Sales in the third quarter jumped 4.5 percent to $6.34 billion from $6.1 billion a quarter earlier and 0.6 percent to $5.848 billion from the previous year. Operating profit was $206.5 million, a 3.5 increase quarter-on-quarter. LG cited its mobile communications and digital display companies as leading recurring profit and net profit to turnaround, booking gains of $31.9 million and $23.7 million despite an equity method loss from LG.Philips LCD.

Strong sales of plasma panels and plasma and LCD digital TVs led an 18.9 percent jump from the previous quarter in sales in its digital display business, and sales in mobile communications showed quarter-on-quarter increases of 4.7 percent and 5.3 percent from the handset business, thanks to strong performance in open markets and robust Chocolate phone sales in North America. Exports recorded $4.74 billion, amounting to 75 percent of total sales.

The mobile communication company recorded sales of $2.41 billion, 4.7 percent higher quarter-on-quarter performance. Operating profit was $102 million, a 370 percent increase from $22 million in the previous quarter.

From the handset business only, revenue rose 5.3 percent to $2.23 billion from $2.125 billion, quarter-on-quarter. Operating profit recorded $82 million, 3.7 percent of total revenue and turnaround from a loss of $3.15 million in the previous quarter.

Total shipments were 16.5 million units (10.5 million in CDMA, 5.6 million in GSM, 0.5 million in WCDMA), an 8 percent increase from the previous quarter of 15.3 million units. Improved shipment in the CMDA market to 10.5 million units from 9.1 million units was driven by strong performance in North America, led by Chocolate phones, and Korea. In sales by region, LG reported a dramatic rise in North America of 45 percent from 28 percent in the previous quarter.

Digital display company sales jumped 18.9 percent from the previous quarter. Performance of plasma and LCD digital TV business rose 50 percent quarter-on-quarter based on shipments. Sales of plasma panels rose 26 percent quarter-on-quarter with the portion of high definition rising to 70 percent, exceeding an industry average of 66 percent. The unit’s operating profit expanded to $44.6 million with a 104.8 percent increase quarter-on-quarter, primarily due to improvement in product mix to large size digital TVs and cost reduction efforts.

Sales from the digital media company increased 2.6 percent quarter-on-quarter to $689 million. The business unit achieved this rise in sales despite a decline in average selling price of IT products, LG said.

Digital appliance company sales declined 11.3 percent quarter-on-quarter primarily due to an increase in raw material cost and a seasonally weak season.

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