SEOUL: South Korea’s biggest home appliances maker, LG Electronics Inc, reported a 24% drop in second-quarter profit yesterday, hit by a sluggish domestic economy and the SARS outbreak in China.
But analysts said earnings from the flagship company of South Korea’s second biggest business conglomerate, LG Group, were likely to have bottomed out. They expect a recovery on strong sales of flat screen TV sets and a turnaround in mobile phone sales.
“The squeezed profit margin is bad news, but its share of profit from its core LG.Philips LCD joint venture is quite good,” said Kim Tae-woo, a fund manager at Mirae Asset Management. “The outlook should be better.”
The company itself forecast a 10% rise in second-half sales from a year ago, betting on cell phone exports to the United States and China. Rival Samsung Electronics Co Ltd had earlier this week said it expected strong growth in mobile phone sales as it rolls out new models.
For the second quarter, LG Electronics – the world’s top maker of air conditioners – earned 258 billion won (US$219 million) in net profit, beating analysts consensus forecasts of 220 billion. The profit included a higher-than-expected 113 billion-won gain from affiliates such as flat screen maker LG.Philips LCD. LG Electronics had posted a 340.7 billion won profit a year ago. – Reuters
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