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January-March Profit for LG Electronics Tipped to be the Best in Nearly Two Years


04/12/2016


January-March Profit for LG Electronics Tipped to be the Best in Nearly Two Years
With earnings apparently lifted by healthy appliance sales and falling television panel prices, South Korea's LG Electronics Inc said that its first-quarter operating profit likely rose 66 percent which points to its best quarter in nearly two years.
 
The company expects a first-quarter profit of 505 billion won ($441 million), its best since the second quarter of 2014, said the world's No. 2 television maker in a regulatory filing. That would be better than any individual forecast in the survey conducted on the company performance by Thomson Reuters I/B/E/S which included opinions from 25 analysts and would be considerably above an average forecast of 408 billion won from the survey.
 
The guidance is being considered by analysts as a sign of recovery at LG Electronics. This is the first time that the company has given an official earnings estimate prior to full publication. Due to a struggling period for its TV and mobile businesses struggled, the company’s 2015 profit had plunged 35 percent.
 
The company provided no further clues on quarterly profit as the company prepares to disclose detailed earnings in late April. However the estimated revenues for the company for the months of January-March would be 13.4 trillion won which would be around 4.5 percent lower than from a year earlier which clearly points to lower operating costs, the company said in the forecast.
 
The healthy sales for its appliances business likely boosted earnings, analysts had said ahead of the firm's disclosure. Growth in sales of high-end products such as organic light-emitting diode televisions and the declining prices for panels were seen lifting earnings.
 
 Analysts are of the view that export values for the company would be enhanced due to the weakness of the South Korean won. During the January-March quarter, there was a fall of 8.4 percent in the local currency's average exchange rate against the dollar.
 
However since the South Korean firm ramps up marketing spending to promote the flagship G5 smartphone that it launched in late March, it is expected that the company's mobile communications division would most probably report its third straight quarterly loss.
 
Analysts would expect a further profit boost if LG Electronics be able to convert the G5 launch into a success story.
 
"If the MC (mobile) division can turn a profit in the second quarter, we'll see a record quarterly operating profit of more than 600 billion won," said Dongbu Securities analyst S.R. Kwon.
 
This was the first time LG Electronics has disclosed official quarterly earnings guidance prior to full publication.
 
(Surce:www.reuters.com)