LG Electronics (LGE), a leader in consumer electronics and mobile communications, announced the unaudited consolidated earnings results of the three-month period ending December 31, 2008.
Sales and Profit
In the fourth quarter of 2008, sales and operating profit on a global basis jumped 22.5% year on year to USD 9.82 billion and USD 74.16 million, resulting in a profit margin of 0.8%. On a parent basis, the company recorded sales of USD 4.84 billion, an operating loss of USD 228 million and a net loss USD 493 million.
2008 annual sales on a global basis soared 20.8% to a company record-high level of USD 36.22 billion with operating profit USD 1.56 billion. Consolidated sales including subsidiaries rose 18.4% Year-on-year to USD 46.39 billion. Operating profit reached USD 2.97 billion, for a margin of 6.4%, 1.1% point higher than the previous year.
LG’s Mobile Communication Company reached a company high of USD 3.3 billion in sales, 34.6% higher than a year earlier. Handset sales accounted for USD 3.0 billion, up 40.3% year-on-year and 16.5% quarter-on-quarter. Shipments of handsets recorded 8% growth year-on-year to 25.7 million, which resulted in a record 100.7 million units being sold in 2008 versus 80.5 million units in 2007.
Sales stayed strong in Europe and Asia despite the economic slowdown. Europe saw the introduction of new models including “Renoir”, an 8-megapixel camera phone, “Cookie”, a full touch-screen phone and “LG-KS360”, a QWERTY keypad-messaging phone, while a quarter-on-quarter increase in India contributed to Asia’s strong performance. Operating profit margin declined 8.8% Year-on-year and 11.5% Quarter-on-quarter to 5.2% in the handset division due to increased marketing to minimize year-end inventory.
While the global economic downturn is expected to continue into 2009, LG’s business target is to grow continuously and expand market share, capturing more of the market for feature-packed premium models, smart-phones and mid-to-low end mass volume units.
Digital Appliance Company sales rose 20.1% to USD 2.18 billion year-on-year. Operating margin resulted in a loss of USD 45 million. Increased competition led to a slowdown of demand and changes in the pricing environment. The slowdown in demand is expected to continue into 2009 but market share growth will be implemented through stronger marketing and cost controls.
Digital Display Company sales jumped to USD 3.39 billion, an increase of 16.4% from a year earlier. Sales of flat panel digital TVs grew 22% Year-on-year and 26% Quarter-on-quarter, but PDP (Plasma Display Panel) module sales declined 44% Year-on-year and 24% Quarter-on-quarter. Globally, operating profit saw a loss of USD 10 million primarily due to a sharp drop in the prices of TVs and slowdown in external sales of PDP modules. The Company sees global demand in 2009 to be similar to 2008 as a result of growing low-end/small sized flat panel TV demand in emerging markets and expects to expand its market share with stronger branding activities and product line-up.
Sales for Digital Media Company increased 11% Year-on-year and 15% Quarter-on-quarter to USD 0.93 billion with operating profit and margin recording USD 3 million and 0.3% respectively.
2009 Business Direction and Prospects
Slow market demand and intensified competition will continue into the New Year causing changes in industry dynamics. Forecasting the exchange rate at KRW 1,100 per US dollar in 2009, the company plans to tighten CAPEX and maintain its investments in branding and R&D.
Commenting on the results, the Managing Director of LGE Levant, Mr. Kevin Cha said, “These results are attributed to our combination of innovative designs with cutting-edge technologies and our pricing and marketing strategies. LGE will continue to enhance the consumer’s lifestyle despite the economic uncertainties by providing them with exceptional products that truly affect their lives in a positive manner. At no other time has consumer insight been more important, and we continue to spear head our industry by listening more closely to our consumer’s needs and desires”.
About LG Electronics, Inc.
LG Electronics, Inc. (KSE: 066570.KS) is a global leader and technology innovator in consumer electronics, home appliances and mobile communications, employing more than 82,000 people working in 114 operations including 82 subsidiaries around the world. With 2007 global sales of USD 44 billion, LG is comprised of five business units - Home Entertainment, Home Appliance, Air Conditioning, Business Solutions and Mobile Communications. LG is the world’s leading producer of mobile handsets, flat panel TVs, air conditioners, front-loading washing machines, optical storage products, DVD players and home theater systems. For more information, please visit www.lge.com.
