LG earnings fall, weak sales in telephony
South Korea's LG Electronics, second largest manufacturer of televisions, publishes a profit fall 90% in the second quarter, a decline much steeper than expected.
The range of smartphones in the group, yet undeveloped, is suffering from competition from Apple and Samsung Electronics, which is expected to increase further in the second semester with the launch of new models of smartphones by the rivals.
"Results are not encouraging until the third quarter but that should improve next quarter with the launch of the new smartphone equipped with the Android operating system," said Nam Dae-jong, an analyst at SK Securities.
A fragile economic recovery and growing uncertainty surrounding the European fiscal crisis could also discourage the demand for flat screen televisions and other appliances such as washing machines or refrigerators.
The group reported an operating profit of 126 billion won (81.7 million euros) in the second quarter, against 1,240 million won a year earlier, Thomson Reuters and a consensus of 210 billion won .
Sales of televisions have been affected by a decline of nearly 10% of the euro against the dollar last quarter, inflating the cost of flat panel displays and other production materials priced in dollars.
Europe accounts for about 40% of turnover generated by the segment LG TVs.
With an operating loss of 120 billion won in the quarter, the mobile phone division remains the weak point of the group that plans to double its production in the second quarter. But everything should depend on the success of its smartphone running Google Android to be launched this quarter with 120 operators.
LG Electronics believes that sales of mobile phones should have little upside in the current quarter.
The group has passed 30.6 million phones in the second quarter, against 27.1 million the previous quarter.
Title LG lost 2.88% to 101,000 won on the Seoul stock exchange.
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