- Up by 92.8% compared to the same period last year
- Posts turnover of KRW 4.92 trillion, operating income of KRW 185.10 billion
- Healthy performance boosted by expanded exports of premium products and timely
unveiling of new products
-Enhanced production of PDP modules by 174% compared to the same period last
year with the second line in full-swing
Seoul, Korea, October 23, 2003 - Despite the sluggish domestic demand for
the third quarter, LG Electronics (LGE) posted KRW 4.92 trillion in sales,
up by 21.7% compared to the same period last year thanks to healthy exports.
Led by Chief Finance Officer Young Soo Kwon, LGE (Vice Chairman and CEO S.S.Kim
/ www.lge.com), held a third-quarter performance review session at the LG Twin
Towers on October 23. The company disclosed its third-quarter performance of
KRW 4.92 trillion in sales (exports accounting for KRW 3.81 trillion and
domestic demand making up KRW 1.11 trillion), KRW 185.10 billion in operating
income, KRW 321.70 billion in ordinary income, and KRW 223.80 billion in net
profit.
[Performance Outline]
Following Korea's sluggish economy, domestic demand declined by 16.7% compared
to last year. With exports rising by 40.5%, however, third quarter sales
surpassed performance during the second quarter. This is the first time a company
has overcome traditional seasonality.
Despite the sagging domestic demand, delay in the recovery of the global IT
economy, and other difficulties, LGE has concentrated its marketing and R&D
efforts on its winning businesses; thus continuing to grow in the areas of
PDP, digital TV, and other prime products.
Aided by increased sales in digital TV, PDP, and optical storage products,
the digital display and media company posted a 5.0% operating profitability
to surpass second quarter's 4.4%.
On the other hand, increased exports did little for the appliance company
as it recorded a 4.1% operating profitability due to a downturn in the
domestic market and harsh competition.
Mobile devices posted higher profitability, thanks to increased exports
and expanded sales share of high vale-added products. Compared to second
quarter???s 2.1%, profitability of mobile devices rose to 5.8%
in the third quarter.
Ordinary income grew by 90.4% to KRW 321.70 billion compared to last year,
thanks to a healthy non-operating income including the KRW 208.5 billion equity
evaluation.
LG Philips LCD reported KRW 1.67 trillion in sales and KRW 376.20 billion
in operating income. Such performance is attributed to a price hike in panels
and an increase in supply in an effort to continue reinforcing its market position
in the large LCD category and to maintain its global market leadership
for four consecutive quarters.
[Performance of Business Divisions]
Digital Display and Media: KRW 1.71 trillion (14.9% increase year on year)
Export of and domestic demand for digital TV grew by 47% and 38%, respectively,
compared to the same period last year. Total TV sales were 22% higher compared
to last year. Optical storage products grew by 33% year on year, boosted by
aggressive sales of DVD writers in the third quarter.
Similarly, product volume in the PDP module category for the third quarter
posted a 174% increase year on year, thanks to the operation of line 2.
The timely unveiling of new products and expanded exports of premium products
have also helped improve sales and profitability of the digital display and
media sector, despite the sluggish global IT economy and sagging domestic market.
Digital Appliances: KRW 1.20 trillion (11.8% increase year-on-year)
Thanks to increased exports of premium products, appliance sales grew by
11.8% year on year. Due to seasonality, however, sales declined by 24.8%
compared to the previous quarter.
Although domestic demand declined by about 8% due to the sluggish domestic economy, sales of premium appliances such as TROMM washing machine and DIOS refrigerator continued to grow. The strong leadership of premium products such as TROMM, DIOS, CyKing, and system commercial air conditioners boosted exports, which posted a 29% increase year on year.
Telecommunications Equipment and Handset (mobile devices/system/PC):
KRW 1.94 trillion (37.1% increase year on year)
Although failing to show clear signs of recovery, the mobile device category
exhibited improved sales performance and profitability as overseas demand
increased in North America, India, China, and Russia and ratio of high
value-added products increased.
The mobile device division posted KRW 1.39 trillion in sales, up by 46.8% compared
to the previous year. Similarly, the system/PC category recorded KRW
547.80 trillion in sales, up by 15% year on year.
6 million CDMA mobile devices were supplied to the domestic market during
the third quarter, showing a similar trend as in the second quarter.
Nonetheless, the business is showing signs of recovery as new products were
unveiled in September. Boosted by an increase in supply to large businesses
in North America and the market recovery in India and China, the volume of
CDMA mobile products rose by 98% year on year.
Recording 1.6 million units in sales, GSM mobile devices also posted 116% higher
volume year on year as the company forged new businesses with large companies
such as in the United States and in Europe.
LGE supplied 7.6 million mobile handsets in the third quarter, posting
a cumulative total of 18.5 million units as of the third quarter. This year
expects to see a supply 26 million units, up by 60% compared to last year.
The PC category posted KRW 409.70 trillion in sales, representing a 65% increase
year on year. Volume also rose by 53% year on year, thanks to the robust
growth in notebook PCs.
[Prospects for the fourth quarter]
In its market outlook for the fourth quarter, LGE expects domestic demand to remain
the same. Nonetheless, the company is confident that it can overcome such setback
by expanding exports of DTV, PDP, TROMM washing machines, DIOS, and other
premium products.
The company expects to achieve the same volume of sales as in the third quarter.
On the other hand, LGE revealed that robust exports and expanded growth in the
mobile handset business were responsible for the KRW 19.6-19.8 trillion in sales
for 2003, up by 15-16% compared to last year.
Following a change in accounting criteria in January and June this year, outsourced
raw materials calculated as sales and buy-and-sell-related accounting items
(in the case of the PC division) were exempted from sales figures. Figures for
identical accounting items were also deducted from sales in the third quarter of
last year and sales in the first and second quarters of this year for a balanced
comparison(see attached public criteria in financial statements and identical criteria).
References (attachment)
1. Financial statement criteria (public criteria) comparison
- Quarterly loss and profit summary
2. Identical comparison (excluding buy-and-sell and cost of outsourced raw materials calculated as sales)
- Quarterly loss and profit summary
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