LG Electronics quarterly profit jumped nearly 50 per cent thanks to strong sales of mobile phones and TVs, but the company is headed for a weaker fourth quarter on higher marketing costs and price competition.
The firm, which trails leader Nokia and Samsung in mobile phones, may also take a hit from a recovery in the Korean won after the local currency's weakness helped LG weather the global crisis.
LG shares ended up 1.7 per cent, recovering from early losses, versus a 0.3 per cent fall in the broader market. The stock is up about 60 per cent so far this year, outperforming the market's 47 per cent gain.
LG earned an operating profit of 850 billion won ($733 million) in the third quarter, beating a consensus forecast of 757.8 billion won by analysts polled by Thomson Reuters. The profit includes LG's foreign affiliates which are important revenue sources for this export-oriented company.
LG sold a record 4.01 million LCD TVs in the third quarter. It also sold a record 31.6 million handsets in July-Sept, up from 29.8 million units sold in April-June.
While profit margin was steady in TVs, LG saw its handset margin slide to 8.8 per cent from 11 per cent in the previous quarter, as heightened competition pushed the company to spend more on marketing.
Last week, Nokia reported its worst results, hit by a major writedown and as it lost market share in smartphones.
LG benefited from strong sales of flat-screen TVs and record operating profits at affiliate LG Display Co Ltd.
The company was cautious on the outlook.
"Entering the peak season for TV, modest sales growth is expected (in the fourth quarter)," LG said in a statement.
"Price erosion in the TV and handset business and an increase in marketing/R&D investment will likely result in lower profitability."
Reuters