Posted by: Ihlwan Moon on July 22, 2009
South Korea’s LG Electronics reported a record quarterly profit in the three months ended in June as it kept gaining market share in the global mobile phone and TV industries from its weaker rivals. The world’s third-largest handset maker and second-largest TV manufacturer said its operating profit, including contributions from overseas subsidiaries, jumped 32% year-on-year to a record $904 million in the second quarter on sales of $11.6 billion, up 14%. Most corporate analysts had projected an operating profit of below $800 million.
The best performer was its mobile phone business. After surpassing Motorola and Sony Ericsson last year to become the No. 3 handset vendor (from the No. 5 in 2007), LG sold 29.8 million handsets in the April-June period, its quarterly record, which compared with 22.6 million in the previous three months. Skott Ahn, head of LG’s handset business, has expressed confidence that his company will grab a 10% share in the global mobile phone market this year, up from 8.6% last year and 7.2% in 2007. LG posted an 11% profit margin in this business, up from 6.7% in the first quarter.
LG, which has been behind Samsung and Sony in popular LCD (liquid-crystal display) TVs although it is the No. 2 only after Samsung in the overall TV industry, is also gaining market share against Japanese rivals in the flat-screen TV segment. LG executives said last month they aim to increase LG’s LCD TV shipments by 70% to 18 million sets this year to overtake Sony and become one of the top two. LG said its sales of flat-screen TVs, including those relying on plasma technology, jumped 45% year-on-year to 4.28 million sets in the second quarter. Its margin from the business jumped to 5% from 0.7% a year earlier.
LG and Samsung are benefiting from a weak Korean currency that has lost about a quarter of its value against the dollar since the beginning of 2008. With the Korean companies stepping up their marketing efforts to take advantage of the windfall from a weak currency, the battle between the Koreans and the Japanese over TV market share appears to be tipping in favor of the Koreans.