LG Electronics 2Q net profit plunges, sales fall

[July 27, 2011]  SEOUL, South Korea (AP) -- LG Electronics, a top global manufacturer of mobile phones and flat-screen TVs, said second-quarter net profit plunged as sales declined and its mobile phone business remained in the red.

LG earned 108.4 billion won ($103.3 million) in the three months ended June 30, the company said Wednesday. That was down 87.3 percent from net profit of 856.4 billion won a year earlier.

The result snapped two straight quarters of net losses for the Seoul, South Korea-based company, which has been making a push into 3D TVs and smartphones. LG has been trying to turn around its mobile phone business amid tough competition in the fast growing global smartphone market.

LG Electronics Inc. ranks No. 2 globally in flat screen televisions behind South Korean rival Samsung Electronics Co. LG trails global leader Nokia Corp. of Finland and Samsung to rank No. 3 in mobile phones.

Sales in the second quarter fell 0.2 percent to 14.4 trillion won.

LG's mobile communications business, which includes phones, suffered its fifth straight quarterly operating loss in the second quarter. But in a sign of improvement the scale of red ink declined sharply on higher smartphone sales and cost-cutting.

The mobile business racked up an operating loss of 54 billion won, sharply lower than 101 billion won in the first quarter and 119 billion won in the second quarter last year. Sales fell 4.6 percent from last year to 3.25 trillion won.

LG said it sold 24.8 million mobile phones during the quarter, up slightly from 24.5 million in the previous three-month period. The company sold over 10 million Optimus smartphones in the first half of this year, according to company spokesman Ken Hong.

LG's results were also hurt by a loss of 56 billion won from investments in affiliates including flat panel maker LG Display Co. and LG Innotek, which manufactures electronic components.

Results were brighter in TVs. LG's home entertainment business saw sales decline 5.4 percent from the year before, but the unit recorded a profit of 90 billion won compared with a loss of 26 billion won the same quarter last year. Sales increased at the company's home appliance and air conditioning businesses, though profitability weakened from the year before.

"We expect profitability of our television business to improve next quarter but overall sales and profits will likely decrease as we reduce shipments of lower-end phones to focus more on the high-end," said LG's chief financial officer David Jung, according to Hong, the spokesman.

Shares in LG Electronics gained 2.6 percent to close at 83,800 won.

Separately, rival Samsung Electronics said Wednesday that it has sold more than 5 million units globally of the Galaxy S II, the latest version of its flagship smartphone, since it went on sale in late April.

[Associated Press; By KELLY OLSEN]

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