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=DJ UPDATE: LG Elec 4Q Net Profit Up 91% On Cellphone Sales
By Evan Ramstad OF THE WALL STREET JOURNAL ASIA
(Dow Jones)--LG Electronics Co. (066570.SE) said its fourth-quarter net profit rose 91% to KRW312.2 billion, its highest level since the second quarter of 2004, led by strong sales volume and improved margins for cellphones.
The performance exceeded analysts' expectations, but the South Korean company also faced the easiest comparison of 2005 in the quarter.
LG's profits in the first half of 2004 were lifted by the record performance of LG.Philips LCD Co. (034220.SE), its liquid-crystal-display joint venture with Philips Electronics NV. By the end of 2004, that business had run into a cyclical downturn, reducing its contribution to LG's profits.
LG earned KRW163.4 billion in the fourth quarter of 2004. Revenue in the latest quarter was KRW6.18 trillion, down 5% from KRW6.52 trillion a year earlier, as the company shifted more of its production out of Korea to other countries.
LG reports its financial results using Korean accounting standards. Only the performance of Korea-based units is included in the quarterly results reported by LG and many other Korean companies. The widening gap between the two sets of figures is clear in LG's consolidated revenue, which includes its overseas operations. That figure was up 2.9% to KRW44.5 trillion for the full year.
LG Chief Executive S.S. Kim earlier this month announced a goal of doubling revenue by 2010, meaning annual growth would have to average 7%.
In Seoul trading, LG Electronics' shares rose 3.7% to close at KRW80,700 apiece.
While LG is Korea's largest maker of appliances, and an increasingly important manufacturer globally, its quarterly earnings have been shaped chiefly by its cellphone business, the fourth-largest in the world after those of Nokia Corp., Motorola Inc. and Samsung Electronics Co., and by the ups and downs of its LCD joint venture.
The company said operating profit margin from its handset division rose to 8.1% from 5.6% a year earlier, due to strong shipments of new models and an increase in sales of so-called 3G models, used on advanced networks in several parts of Asia and Europe.
LG shipped 16.2 million cellphones in the quarter, up 17% from 13.9 million a year earlier. That lifted LG's full-year total to 54.9 million, up 23.7% from 2004 but below its target of 62 million.
It set a new target of 70 million units for 2006, an aggressive increase of 27% over last year's actual tally at a time when the industry's overall unit growth is expected to be in the 10% to 15% range.
LG recorded KRW113 billion in profit contribution from LG.Philips LCD in the latest period, up from KRW25 billion a year ago.
LG's appliance business, its largest after cellphones, experienced a seasonal downturn in sales and profitability in the fourth quarter.
LG said it would increase its capital spending by 3% this year to KRW1.7 trillion. It will spend KRW282 billion of that to increase production of plasma display panels for TVs.
Separately, the company said it agreed to spend EUR101 million on a new appliance and TV factory in Wroclow, Poland.

-By Evan Ramstad, Wall Street Journal Asia, [phone]
(Yun-Hee Kim of Dow Jones Newswires contributed to this article.)

(END) Dow Jones Newswires
01-24-06 0437ET
Copyright (c) 2006 Dow Jones & Company, Inc.



DJ S Korea LG Electronics 4Q Net KRW312.2B Vs KRW163.4B -2-

LG Electronics realized a gain of KRW113 billion during the fourth quarter from its equity holding in flat panel display maker LG.Philips LCD. The gain more than offset a provision of KRW51 billion LG Electronics booked from its equity stake in joint venture LG.Philips Displays which makes cathode ray tubes.
Earlier this month, LG Philips LCD reported that its fourth-quarter net profit surged nearly tenfold to KRW328 billion from KRW35 billion a year earlier when the liquid crystal display industry was in the midst of a severe downturn due to an oversupply of panels. LG.Philips Displays said last month it would take a $725 million charge in the fourth quarter related to a sales slump in CRTs - the bulky tubes used in computers and television sets.
For this year, LG Electronics is targeting sales at home of KRW24 trillion to KRW24.5 trillion, up 1% to 3% from 2005, while consolidated sales are forecast to rise 8% to 10% from 2005 to between KRW38.5 trillion and KRW39 trillion.
While the company didn't provide a net profit forecast it said it anticipates improving profitability from display products.
The company plans to boost capital spending - including spending for its overseas operations - by 3% this year to KRW1.7 trillion. It plans to spend around KRW1.4 trillion on research and development investments, unchanged from 2005. On a parent basis, the company plans to invest a total of KRW2.5 trillion on facilities and R&D.
During the just-ended fourth quarter, LG Electronics said it sold 16.2 million mobile phones. The company said operating profit margin from its handset division rose to 8.1% from 5.6% a year earlier due to strong shipments of new models and an increase in sales of third-generation wide band code division multiple access, or WCDMA, phones.
LG Electronics predicted that global sales of mobile phones are expected to reach around 820 million to 860 million units this year, up from an estimated 780 million in 2005. The company is targeting the sale of 70 million units this year, up 27% from 55 million sold in 2005.
Separately, LG Electronics said it plans to invest KRW282 billion to boost its production capacity of plasma display panels widely used in TVs. The additional investment will allow LG Electronics to have a monthly production capacity of 160,000 units.
The announcement came after the company also said Tuesday that it has signed an agreement with the Polish government to build a EUR101 million plant in Wroclow to produce home appliances and LCD televisions.
-By Yun-Hee Kim, Dow Jones Newswires; 822-732-2165; [e-mail]
(So-Yoon Moon contributed to this story.)
-Edited by Costas Paris

(END) Dow Jones Newswires
01-24-06 0109ET
Copyright (c) 2006 Dow Jones & Company, Inc.