Asian CE Financials Show Changing Market

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LG Electronics returned to profitability, Samsung posted record profits while Sharp Electronics and Yamaha reported losses.

Based on the recent financial news from Japan and Korea, that wasn’t shocking, but what was a surprise was that JVC Kenwood recorded its first annual profit since the company was formed in 2008.

While we wait for Panasonic, Pioneer and Sony to report their fiscal year results later this week, here are what these five Asian manufacturers posted recently which provide a glimpse of what the current condition of CE manufacturers are in Asia:

LG Electronics

rebounded to profitability in the first quarter, reporting a net profit of $214.9 million, following two straight quarters of net losses.

Unaudited consolidated financial results showed consolidated revenues of $10.8 billion, with an operating profit of $396.1 million.

LG’s home entertainment unit saw operating profit nearly double in the quarter, year over year, to $191.9 million, on sales of $4.7 billion, which were down 6.8 percent compared with the first quarter of 2011. LG cited the sluggish European economy as elemental in the sales decline, but sales of richer-featured flatscreen TVs drove profitability.

The company’s mobile communications business saw its operating profit more than triple quarter over quarter to $34.5 million. The gain was largely driven by strong higher-margin smartphone sales, the company said, though overall revenues declined 14 percent year over year to $2.2 billion, as a result of declining feature phone sales.

LG sold 13.7 million handsets in the first quarter, down from 17.7 million units shipped in the fourth quarter, but the company sharpened its operating profit margin to 1.4 percent vs. a 3.5 percent margin loss a year earlier.

LG’s home appliance unit’s operating profit grew 48 percent from the same period last year to $134.4 million, on a 2.7 percent decrease in revenues year over year to $2.2 billion, thanks to higher average sales price, better product mix and cost efficiency, the company said.

Samsung Electronics

reported double-digit increases in revenues and operating profits for the first quarter, ended March 31. Revenues in the quarter were 45.27 trillion Korean won on a consolidated basis, a 22 percent increase year on year.

For the quarter, Samsung’s operating profit reached an all-time high of 5.85 trillion won, representing a 98 percent increase year on year. Consolidated net profit for the January through March period was 5.05 trillion won.

Samsung’s strong performance in the quarter was driven mainly by the IT and mobile communications segment.In particular, solid growth in the mobile communications business, with brisk sales of flagship Galaxy Note and Galaxy S II devices contributed to the company’s profitability.

The consolidated operating profit for IT and mobile communications businesses reached 4.27 trillion won on revenue of 23.22 trillion won. The display panel business rebounded in the first quarter with operating gains of 280 billion won, following an uptick in demand for high-margin panels used in tablets, 3D/ LED TVs and premium OLED panels.

Operating profit for the display panel business turned around from the previous quarter to register 280 billion won on revenue of 8.54 trillion won in the first quarter.

The IT and mobile communications division registered quarterly operating profits of 4.27 trillion won for the first period. Revenue reached 23.22 trillion won, and the mobile unit accounted for 18.90 trillion won, up 86 percent year on-year.

Samsung’s consumer electronics businesses, which encompass visual display and digital appliances, registered an operating profit of 530 billion won in the quarter, up 550 percent year on year, on revenues of 10.67 trillion won.

Sharp Electronics

reported a net loss and a double-digit drop in net sales in its fiscal year, ended March 31.

The net loss was 376 billion yen compared with the prior year’s net income of 19.4 billion yen, and sales were down 18.7 percent for the year to 2.46 trillion yen.

Sharp blamed the usual culprits — the continued strength of the yen, troubles with the Japanese and European economies and a slowdown in China — and lower demand for LCD TVs.

In its consumer/information products unit, sales were down 25.6 percent to 1.06 trillion yen compared with the prior year due to lower demand in Japan and higher price declines, which were “slightly offset” by large-size LCD TVs 60 inches and larger, especially in North America.

JVC Kenwood

reported lower sales and but a net profit for its fiscal year, ended March 31, the first annual profit since the company was formed in 2008.

Net sales were 320.7 billion yen, down 9 percent from the prior year, and the company reported a net profit of 6.03 billion yen compared with the prior year’s net loss of 4.02 billion yen, its first year-on-year net profit since JVC Kenwood was formed in October 2008.

In car electronics, sales were down 1.1 percent to 107.2 billion yen and had an operating loss of 1.5 billion yen.

Home and mobile sales were down 22.5 percent to 77.5 billion yen, but operating profit was 1.73 billion yen, reversing the prior year’s 835 million yen loss.


posted a net loss of 29.4 billion yen ($366.5 million) in fiscal 2012 ending March 31, on a 4.6 percent decline in sales to 356.6 billion yen ($4.45 billion). In fiscal 2011, the company posted a net profit of 5.1 billion yen.

Full-year sales slipped because of the slow global economy, historically high value of the Japanese yen against other currencies, and musical-instrument production delays caused by parts shortages, the company said.

The musical instruments and AV/IT (which includes home audio) segments posted operating incomes of 7.7 million yen and 2.87 million yen, respectively, and semiconductors posted an operating loss of only 2.9 million yen.

Yamaha forecasts net income of 9 billion yen ($112 million) in fiscal 2013, which runs from April 2012 through March 31, 2013, on a 6 percent gain in net sales.

Currency conversions for Yamaha were based on $1=80.2 yen.

— Additional reporting by John Laposky and Joseph Palenchar.


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