LG Electronics Inc, Asia's second-largest maker of mobile phones, posted an increase in third-quarter profit, beating analysts' estimates, on more expensive handset models and gains from liquid-crystal displays.
Net income surged to 339.2 billion won (US$370 million), from 22.7 billion won a year earlier, Seoul-based LG said in a regulatory filing yesterday. That beat the 275-billion-won median estimate of 15 analysts surveyed by Bloomberg News.
Sales fell six percent to 5.69 trillion won. LG Electronics shares fell after operating profit missed analysts' predictions.
Shipments of mobile phones, LG's biggest business by revenue, climbed to a record as the company's Chocolate and Shine models helped it close the gap with Sony Ericsson Mobile Communications Ltd. Earnings were also boosted by contributions from unit LG.Philips LCD Co, which reported a loss a year earlier.
"Profit should increase in the next quarter and into next year" as handset margins are maintained or improved, said Kim Jun Ki, who helps manage the equivalent of US$1.1 billion at Hanwha Investment Trust Management Co. "The display business will post better figures with each quarter, as the industry turns around."
LG Electronics shares fell 3.3 percent to 87,900 won at the end of trading in Seoul, while the benchmark Kospi index slid 1.5 percent.
Operating profit, or sales minus the cost of goods sold and administrative expenses, fell 53 percent to 92.4 billion won, missing the 183-billion-won estimate in the Bloomberg survey.
LG is betting on more expensive phones to drive earnings at its handset division, where profitability climbed to a record during the second quarter.
Operating profit at the mobile-phone unit, which accounted for 40 percent of revenue last year, more than doubled to 170.4 billion won on sales of 2.13 trillion won. Analysts had estimated profit of 182 billion won on sales of 2.36 trillion won.
LG said sales of the Shine and Chocolate slide-up phones and the release of a touch-screen model developed with luxury-goods maker Prada SpA, priced at 600 euros (US$853), boosted earnings.
Handset shipments, including by overseas subsidiaries, rose to a record 21.9 million units in the third quarter, LG said.