LG Electronics says 3Q profit plunges

SEOUL/SOUTH KOREA: LG Electronics said on Monday that third-quarter net profit plunged more than 90 per cent as weakness in the South Korean won made it more expensive to service debt denominated in foreign currency.

LG Electronics Inc. earned 24.9 billion won (US$18.9 million) in the three months ended Sept. 30, down 92.7 percent from the same period last year, the company said in a regulatory filing. LG posted net profit of 339.2 billion won during the third quarter of 2007.

Sales rose 21 percent to 6.89 trillion won (US$5.24 billion) from 5.69 trillion won a year earlier, the company said. LG Electronics, the world's fourth-largest manufacturer of mobile phones, also produces a variety of products including household appliances, personal computers and televisions.

The U.S. dollar was 14.5 percent higher against the South Korean won on average in the third quarter compared with the same period last year, according to figures provided by LG.

A stronger dollar means the company had to use more South Korean won to service its foreign currency-denominated debt. The company also said net profit was hurt by a 125 billion won equity method decrease from earnings in its overseas subsidiaries and investment in South Korea's LG Display.

An equity method gain or loss is the positive or negative earnings impact from related companies. Flat panel manufacturer LG Display said last week that third-quarter net profit fell 43.7 percent to 295 billion won (US$224.3 million). LG Electronics owns 37.9 percent of LG Display.

LG Electronics said it sold 23 million mobile phone handsets in the quarter, a gain of 5 percent from the year before period. Sales dropped 17 percent from this year's second quarter, however, on weaker sales in India and other emerging markets.

Still, the company said it expects to achieve its goal of 100 million handset shipments for 2008 on growth in the fourth quarter. Shares in LG, which released earnings before the stock market closed, rose 1.8 percent to close at 97,100 won (US$74).