Strong cell phone sales boost LG Electronics

LG Electronics Inc. said yesterday its fourth-quarter profit almost doubled from a year ago on robust sales of cell phones, and analysts forecast a positive outlook this year. Korea’s second-largest consumer electronics maker said in a regulatory filing yesterday that its fourth-quarter net profit climbed 91 percent to 312.2 billion won ($320 million) compared to last year and its operating profit was 211 billion won, a 122 percent increase. Shares of the company rose 3.8 percent on the Kospi market yesterday. For 2005, the company said its operating profit was 915 billion won, net profit was 703 billion won and sales were 23.8 trillion won, down 27 percent, 55 percent and 3.6 percent, respectively, from 2004. The drop in net profit was due to the appreciation of the won against the dollar and a sharp price fall in liquid crystal display panels used in televisions and monitors, the company said. LG Electronics’ mobile communication sector posted 217 billion won in operating profit in the fourth quarter, which the company said was helped by rising demand for third-generation cell phones and its premium model, named Chocolate Phone. The world’s fourth-largest cell phone maker by volume said it expects to sell more than 70 million units worldwide this year by increasing sales in Europe and North America. According to Choi Hyun-jae, an analyst from Hanwha Securities Co., LG’s operating profit rate margin in the fourth quarter rose almost 3 percentage points from the previous quarter, which means the company’s financial structure has improved. He added that the strong sales of cellular phones would perk up the electronics maker’s overall performance. The company has set its sales goal this year at 23.5 trillion won, up 3 percent from last year, while its global sales target is aimed to grow 10 percent, to 39 trillion won. Meanwhile, LG announced yesterday that it had signed a contract with the Polish government to build a premium consumer electronics plant there, which is expected to be completed in 2011. The company will spend $122 million on the plant, in the southwestern city of Wroclaw. Construction will begin within the first six months of this year and some production is scheduled to begin in the first quarter of next year. by Seo Ji-eun