Weak demand for handsets hits LG Electronics
LG Electronics, the world's third-largest mobile phone maker, yesterday reported a second successive quarterly loss as demand for handsets and televisions dwindled amid the global economic downturn.
But the South Korean company expects group sales to increase 10 per cent in the second quarter compared with the first, helped by rising seasonal demand for its air conditioners.
"With the start of the high season for air conditioners and the introduction of new products in major categories, the company expects sales to expand over 10 per cent quarter on quarter," said LG.
The world's leading mobile makers are all braced for falling sales in the global recession, as consumers cut their spending on handsets.
However, LG's mobile division saw its unit sales hold up better than Nokia and Sony Ericsson in the first quarter of 2009.
LG sold 22.6m mobiles in the three months to March 31, down 7 per cent compared with the same period last year. Unit sales fell 19 per cent and 35 per cent at Nokia and Sony Ericsson respectively in the first quarter.
LG is seeking to increase its market share of mobile sales from 8.5 per cent in 2008 to 10 per cent this year.
Per Lindberg, analyst at MF Global, said LG's market share strategy suggested that Nokia would face tough competition in 2009.
LG's handset unit reported revenue of Won3,916bn ($2.9bn) for the first quarter, up 23 per cent, but profitability is declining.
The unit recorded an operating profit of Won263bn, down 41 per cent, resulting in a margin of 6.7 per cent, compared with 13.9 per cent in the first quarter of 2008.
LG's home entertainment unit, which manufactures TVs, reported revenue of Won4,298bn, up 19 per cent, and operating profit of Won14bn, compared with a loss of Won13bn in the first quarter of 2008.
LG's parent company recorded a net loss of Won198bn for the first three months of 2009. It recorded a loss of Won671bn for the fourth quarter of 2008.
Some industry analysts expect LG to return to a net profit in the second quarter.
"We are confident of stronger momentum in the handset business in 2009 and see the TV business delivering 40 per cent year-on-year unit growth this year," said James Kim, analyst at Nomura.
source
But the South Korean company expects group sales to increase 10 per cent in the second quarter compared with the first, helped by rising seasonal demand for its air conditioners.
"With the start of the high season for air conditioners and the introduction of new products in major categories, the company expects sales to expand over 10 per cent quarter on quarter," said LG.
The world's leading mobile makers are all braced for falling sales in the global recession, as consumers cut their spending on handsets.
However, LG's mobile division saw its unit sales hold up better than Nokia and Sony Ericsson in the first quarter of 2009.
LG sold 22.6m mobiles in the three months to March 31, down 7 per cent compared with the same period last year. Unit sales fell 19 per cent and 35 per cent at Nokia and Sony Ericsson respectively in the first quarter.
LG is seeking to increase its market share of mobile sales from 8.5 per cent in 2008 to 10 per cent this year.
Per Lindberg, analyst at MF Global, said LG's market share strategy suggested that Nokia would face tough competition in 2009.
LG's handset unit reported revenue of Won3,916bn ($2.9bn) for the first quarter, up 23 per cent, but profitability is declining.
The unit recorded an operating profit of Won263bn, down 41 per cent, resulting in a margin of 6.7 per cent, compared with 13.9 per cent in the first quarter of 2008.
LG's home entertainment unit, which manufactures TVs, reported revenue of Won4,298bn, up 19 per cent, and operating profit of Won14bn, compared with a loss of Won13bn in the first quarter of 2008.
LG's parent company recorded a net loss of Won198bn for the first three months of 2009. It recorded a loss of Won671bn for the fourth quarter of 2008.
Some industry analysts expect LG to return to a net profit in the second quarter.
"We are confident of stronger momentum in the handset business in 2009 and see the TV business delivering 40 per cent year-on-year unit growth this year," said James Kim, analyst at Nomura.
source
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