LG Electronics Inc is expected to report on Tuesday its quarterly profit sank 28 percent from a year ago on lower mobile phone margins and flat screen prices, but jumped from the second quarter on recovering handset business.
The outlook for the world's fourth-largest mobile phone maker is better with improving trends in mobile phone and flat screen operations, analysts said.
LG posted its first operating loss from handset sales in the second quarter, but is likely to return to the black on rising shipments of more expensive handsets to clients including Verizon Communications Inc and cost-cutting plant integration.
"A combination of an improved handset business and a turnaround in the PDP business is likely to be the key earnings growth driver," said Sun Chung, an analyst at Nomura Securities.
The won is also turning weaker, making exports more price competitive.
LG, which competes with local rival Samsung Electronics Co Ltd in making mobile phones and TVs, is expected to report a net profit of 220 billion won ($210 million) in the quarter ended September 30, according to the median forecast from seven analysts polled by Reuters Estimates.
That would mark a 28 percent drop from 304.4 billion won a year ago, but a 46 percent increase from 150.6 billion in the second quarter, when cut-throat competition wiped out margins in its handset sales.
Sales are estimated at 6.04 trillion won, against 6.11 trillion a year ago and 5.62 trillion in the second quarter.
For the full year, LG is likely to see its profit more than halved to 721.8 billion won from 1.55 trillion in 2004. This indicates a fourth-quarter net profit of 268 billion won, up 64 percent from a year earlier. LG is forecast to post 1.34 trillion won in net profit in 2006.
An LG executive said last month the firm's handset sales volume was expected to reach almost 17 million in the third quarter, up from 12 million in the second quarter, helped by strong demand from US operators.
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