Seoul, South Korea - LG Electronics reported record net profits and sales due to growth in cellphones and flat-screen TVs during the second quarter.
On a global basis sales rose 13.8 percent to $11.2 billion and net profit rose 62 percent to $919 million compared with the previous year.
The home entertainment company saw sales rising by 19.3 percent to $3.5 billion, returning a profit of $174 million for a margin of 5.0 percent, 4.7 percent higher than the previous year, as a result of robust flat-panel TV sales - especially LCD TVs - even during the off-season.
Year-on-year shipments increased 45 percent 4.28 million units. The company expects its flat-panel TV shipments in the third quarter to be even higher as demand for premium models.
The mobile communications company reported $3.98 billion in sales, 25.8 percent higher than the previous year, and operating profit of $422 million with a margin of 10.6 percent. Handset sales accounted for $3.8 billion, up 29.9 percent year on year, and operating profit reached $417 million for a margin of 11 percent.
Shipments of handsets recorded an increase of 7.8 percent year on year and 32 percent quarter to quarter to 29.82 million units, LG said.
The company credited strong demand in midtier models, such as the full touchscreen Cookie phone, QWERTY keypad messaging phone LG-KS360, a multimedia powerhouse feature-rich Arena with new S-Class UI, enV3 with a QWERTY keypad for messaging, and enV Touch with a QWERTY keypad and touchscreen.
Profitability improved with a product mix centered on new model launches and solid growth from existing mid- to high-tier handsets. With the global economic downturn expected to continue, LG sees the global market declining more than 6 percent year over year to around 280 million units in the third quarter, but, as for LG, steady growth is expected with the introduction of high-end devices such as the fourth model in the LG Black Label series, smartphone GM730, and the one-of-a-kind GD900 Crystal with transparent keypad.
The home appliance company reported an increase of 9.8 percent to $1.812 billion year on year. The currency impact resulted in sales declining 14 percent on a U.S. dollar base but growing 10 percent for Korean won.
Continuing problems in the housing market slowed the pace of recovery of the home appliances industry but the company's product competitiveness resulted in an operating margin of 7.7 percent, 2.9 percent higher from a year earlier, at $140 million. Looking at the third quarter, market demand is expected to shrink year on year due to the ongoing recession, but the decline in the market is expected to slow down.
The air conditioning company saw sales rise 1.8 percent to $1.3 billion year-on-year, with sales falling in U.S. dollar base but increasing in Korean won base.
Operating margin resulted in a profit of $136 million due to the growth in demand of premium models.
LG Electronics expects sales to grow more than 10 percent year on year as demand for LCD TVs and mobile phones continues to expand, with profitability comparable with last year's level.