Seoul, South Korea — LG Electronics reported a net loss of $141 million in its fiscal first quarter, ended March 31, on a parent basis, but reported growth in several categories and sees positive signs for its second quarter.
LG blamed foreign exchange losses and an equity loss of $64 million in LG Display, where the company has a 37.9 percent stake. LG is projecting a 10 percent sales gain, due to the beginning of the air conditioner season “and introduction of new products in major categories, the company said.
On a global basis including LG's overseas subsidiaries, sales grew soared 14.6 percent to $9.12 billion year on year. Operating profit was $324 million resulting in a margin of 3.5 percent, 2.8 percent higher than the previous quarter.
On a parent basis, the company recorded sales of $5.02 billion, an operating profit of $310 million. Consolidated sales including affiliates rose 10.7 percent to $11.28 billion, with operating profit of $83 million, for a margin of 0.7 percent, 1.5 percent higher than a year earlier.
The Home Entertainment Company sales rose 18.6 percent to $3.05 billion and returned a profit of $10 million due to “robust flat-panel TV sales, especially LCD TVs, even during low season,” LG said.
Shipments rose 40 percent year on year to 3.54 million units. LG expects global demand in 2Q to be higher as demand for small flat-panel TVs grows in emerging markets and developed markets look to purchase second units.
The Mobile Communications Company reported $3.02 billion in sales, 16.8 percent higher than the previous year, and operating profit of $181 million with a margin of 6.0 percent. Handset sales accounted for $2.78 billion), up 22.6 million year over year and operating profit saw $187 million at a margin of 6.7 percent.
Shipments of handsets recorded a decline of 7 percent year on year and 12 percent quarter on quarter, to 22.6 million units, due to seasonal effect and the global market contraction. With the global economic downturn expected to continue, LG sees the global market declining over 10 percent year over year to around 260 million in the second quarter.
LG is targeting over 10 percent quarterly growth by focusing on high-tier, feature-rich products such as Arena, with a new S-Class UI, messaging phones such as Xenon and Neon, Viewty Smart, an 8-megapixel camera phone and GD900, with a transparent keypad.
The Home Appliance Company reported an increase of 16 percent to $1.57 billion year on year. The currency impact resulted in sales declining on a U.S. dollar base but growing for Korean won. The business downturn in the housing market slowed down the pace of the current recovery of consumption of the home appliance products, but the company's product competitiveness led the operating margin successfully recovered from loss from a year earlier to $72 million.
Looking at the second quarter, market demand is expected to shrink year on year due to the ongoing recession, but the decline in the market will likely slow down.
The Air Conditioning Company saw sales rise 8.9 percent to $900 million year on year with U.S. dollar sales declining but sales increasing in the Korean won. Operating margin resulted in a profit of $43 million due to growth in premium models. Despite the global recession, the company foresees sales growing in the second quarter due to the seasonal change, LG said.