By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Strong demand for plasma and LCD digital televisions helped push up first-quarter LG Electronics digital display segment sales by 13.6 percent to $1.5 billion, compared with $1.3 billion in the year-ago period.
Export sales for the segment rose to $1.1 billion from the previous year's $968 million.
Operating profit for the digital display business in the first quarter, ended March 31, turned around, said LG, notching $31 million, due primarily to improvement in product mix of large-size digital TVs and cost reduction efforts. Profit in the first quarter of 2005 was $18.2 million. The company said it shipped 730,000 PDP units, 9 percent more than the previous quarter's 670,000 units.
Sales in LG's digital media segment dropped to $782 million in the first quarter, from $904.2 million in the same period a year ago. Sales were off 6.8 percent in sequential quarters. The decline in average selling price of audio-video products such as HD-type set-top boxes and direct-view TV in overseas markets was the main reason for the slide. Export sales in the first quarter dropped to $596.4 million, from a year-earlier $606.9 million.
Operating profit for the digital media segment remained flat at $24.6 million in the first quarter, compared with the same period last year.
LG's mobile communications segment recorded sales of $2.1 billion in the first quarter, down from $2.3 billion year-over-year, including $1.9 billion for handsets, down from $2 billion in the fourth quarter of 2005.
Exports in mobile communications came in at $1.8 billion for the first quarter, a decrease from last year's $1.9 billion, while exports of handsets in the quarter reached $1.6 billion, down from a year-ago $1.7 billion.
The segment had an operating loss of $9.1 million in the quarter, compared with an operating profit of $109 million in the same period the prior year, with handsets recording a loss of $32 million, compared with operating profit of $71.6 million a year earlier. The decline in profitability stems from shipment decreases — down 4 percent, compared with the fourth quarter in 2005 — product mix deterioration, higher marketing expenses and accounting changes, said the company.
LG shipped 15.6 million handsets, compared with the 11 million moved a year earlier, but off from the 16.2 million units shipped in the fourth quarter if 2005.
In its appliance business, LG saw first-quarter sales drop 5.7 percent to $1.6 billion, from $1.8 billion due to the strong won and expansion of overseas production. The company, however, said it still benefited from strong sales of premium products, such as washing machines and side-by-side refrigerators sold in North America. Segment operating profit dropped to $164 million from $181.7 million.
Export sales of appliances came in at $1.2 billion for the first quarter, down from $1.3 billion in the same period last year.
Consolidated first-quarter sales at LG decreased to $6.2 billion, from $6.4 billion in the first three months the prior year. Consolidated export sales declined in the three months to $4.6 billion, compared with $5 billion in the fourth quarter of last year, due to seasonally low handset sales in overseas markets.
Consolidated operating profit in the first quarter decreased to $195 million, from $274 million year-on-year, due to weaker profitability in the mobile handsets business, although digital display profitability turned around and the appliance business was strong, said LG.
Net profit came in at $164 million for the fourth quarter, nearly double the $85 million recorded in the previous year, but down from $319 million in the fourth quarter of 2005. The year-on-year increase was boosted by the company's flat-screen business, offset somewhat by decreasing margins for phones.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.