LG quarterly net down 86%

Seoul, April 19 | Updated: Apr 20 2005, 05:30am hrs
South Koreas LG Electronics Inc reported an 86% fall in quarterly net profits, but its shares climbed as strength in its home appliances arm limited losses on currency and in its flat-screen businesses.

Operating profit fell less than expected, by only 31%, thanks to improved profitability at its home appliance division that sells refrigerators, airconditioners and washing machine. LG, also the worlds fourth-largest mobile phone maker, looks set to bounce back later this year thanks to stronger handset shipments and reduced losses from plasma screens for televisions.

The operating profit was bigger than expected and thats why shares are gaining, said Kim Yung-min, strategist at Dongwon Investment Trust Management. Profits are likely to improve a little bit by the second quarter, but we wont see significant improvements until the second half of the year. LG Electronics, which competes with local rival Samsung Electronics Co Ltd in making phones, televisions and refrigerators, posted 83.2 billion won ($81.8 million) net profit for the first quarter ended March, falling short of analysts forecast of 136 billion profit. The figure was down 86% from a record 584.7 billion profit a year ago and 49% from a revised 163.4 billion in the previous quarter. Operating profit slipped 31% to 279.8 billion won, better than analysts forecasts of 215 billion won.

Turnover fell to 5.96 trillion won from just short of 6 trillion a year ago.

The won gained 14.5% against the dollar in the first quarter compared with a year ago, making LGs products more expensive abroad. LG derives almost 80% of its sales from exports. LG Electronics will focus on premium brand products and cost innovation to counter concerns over external factors such as raw material cost hikes, display price declines and exchange rates, the company said in a result statement.

Shares in LG, the countrys ninth-largest stock with a market value of $10 billion, closed up 3.07% at 67,100 won, the biggest rise since February topping up gains after the results.