LG Electronics back in black on record handset sales

Healthy demand for higher-value 3G mobile handsets helped South Korean manufacturer LG Electronics back into profit for the three months to 31 December 2004. LG, the world’s fifth largest phone maker, posted a net profit of KRW143.6 billion (USD138.3 million), compared with a loss of KRW17 billion a year ago – due to heavy restructuring costs related to its TV tubes unit – and profit of KRW304 billion in Q3 2004; full year profit doubled to KRW1.53 trillion. Sales rose by 20% to KRW1.53 trillion in the period with the company predicting turnover of KRW28-KRW30 trillion in 2005, up from KRW24.7 trillion in 2004. Despite the strong performance, LG says it expects profits will dip by 12% in 2005 due to slowing momentum in its other operating units and falling prices for flat screen monitors. With its mobile phone division the only one providing a solid profit margin, LG says it needs to ‘address the impact of a stronger won on its bottom line.’ Currency factors hit the company hard after the won gained 11% on the dollar in the fourth quarter. Nonetheless, in 2005 overall handset sales are expected to grow by 40% year-on-year to 62 million units.