(LEAD) LG Electronics reports over 30-fold on-year surge in Q3

earnings
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By Lee Youkyung
SEOUL, Oct. 21 (Yonhap) -- LG Electronics Inc., the world's No. 2 maker of liquid
crystal display (LCD) TVs, reported Wednesday an over 30-fold on-year increase in
third-quarter earnings on a surge in global demand for its mobile handsets and
LCD TVs.

LG Electronics registered a net profit of 807.2 billion won (US$685 million) in
the July-September period on a parent-basis, up 3,144 percent from 24.9 billion
won a year earlier, the company said in a regulatory filing.
The company's bottom line, however, fell 30 percent from the second quarter after
it posted record high quarterly profits.
The profits report exceeded a market forecast of 646 billion won made by Yonhap
Infomax, the financial news arm of Yonhap News Agency.
Sales rose 14 percent on year to 7.87 trillion won while operating profit climbed
79 percent to 602.8 billion won, the company said.
Shares of LG Electronics were trading at 119,000 won on the Seoul bourse as of
1:50 p.m., up 0.42 percent from Tuesday's close. The Korea Composite Stock Price
Index (KOSPI) overall fell nearly 0.3 percent.
LG Electronics, which is also the world's third largest mobile handset maker
after Nokia and Samsung Electronics, said its on-year earnings spiked on a rise
in overseas sales and shipments. The company underperformed its second-quarter
reports, however, due to increasing costs for panels and an upturn in marketing
fees, it said.
The company attributed the spike in earnings reports to record high quarterly
sales of its mobile phones and LCD TVs, due mainly to increased sales in Europe
and emerging markets. The number of mobile phones sold in the third quarter
passed the 30 million-mark for the first time ever while four million LCD TVs
were shipped globally.
The company said its five divisions continued to post net gains after swinging
back into positive territory in the second quarter. LG's home appliance division
registered the highest revenues on a quarterly basis, reaching 2.5 trillion won
on recovered demand for its goods from Asia and the Middle East.
LG Electronics however, said its fourth quarter prospects hinged on demand. It
stressed that while demand for TVs and mobile phones was likely to remain robust
there is a risk of a downturn in TV and phone prices. It added aggressive
spending in marketing and in research and development (R&D) could affect profit
margins for the last quarter.
Analysts echoed this view and said short-term earnings concerns persist, but they
maintained an upbeat forecasts for 2010 earnings as the expected release of light
emitting diode (LED) TVs and smart-phone models may bolster sales overseas.
"We maintain a positive view on LG Electronics despite concerns over its
short-term earnings since the main cause of its sluggish earnings forecasts for
the fourth quarter is a temporary increase in market competition, not structural
problems," wrote Lee Hak-moo, an analyst at Mirae Asset Securities in a report.
Others said the growing spending on marketing would lead to generating further
gains.
"We expect that as LG Electronics will have achieved much of its internal profit
target this year by end of the third quarter, it will increase strategic
investment budgets for recruiting R&D engineers, distribution channel expansion,
brand marketing and year-end inventory clearance." wrote Henry Kim, an analyst at
Citi Bank in a report.
ylee@yna.co.kr
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