LG Electronics’ net profit dipped form a year ago. This is mainly due to the stronger Korean won against the U.S. dollar. A second aspect of the loss at LGE stems from its investment in flat panel display maker LG Philips LCD.
For example, Korea's largest home appliance maker, LG's net profit for the first three months of the year stood at 83.2 billion won, a sharp drop from 584.7 billion won a year earlier.
Why?
The Korean Won gained 14.5 percent against the dollar in the first quarter compared to a year ago. This makes LG Electronics’ products more expensive abroad. In fact, LG derives almost 80 percent of its sales from exports.
Also, LG Electronics is suffering from a global glut of flat screens. Weak consumer demand for the expensive televisions is cited.
Finally, LG Electronics globally sold 11.1 million mobile phones in the first quarter, down from 13.9 million in the fourth quarter. It is thought that LG suffered in the first quarter as mobile providers cut sales to clear out inventory. Motorola sales are also rebounding since its launch was well-received models.
In spite of the fiscal downturn, LG Electronics expects to bounce back later this year due to stronger mobile handset shipments and reduced losses from TV plasma screens.
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