LG Electronics posted strong third-quarter financial performance partly as a result of record-breaking cell phone sales. Unlike Nokia who reported a worrying loss, the Korean company’s global profit has jumped nearly 50 percent year-over-year to $733 million in the third quarter of 2009.LG, the world’s third-largest handset maker behind Nokia and Samsung, posted significant growth in handset shipments both on sequential and annual bases. During the July-September period, the manufacturer sold 31 million handsets, representing a 6 percent increase from the second quarter, and a 37 percent jump from the year-ago quarter. Handset sales amounted to $3.53 billion, up nearly 25 percent on a year-to-year basis.
The Korean manufacturer said its strong fiscal performance in the third quarter is driven by sales of its array of messaging devices and the affordable touchscreen smartphone, the Cookie. The increase in shipments across Europe and the emerging markets managed to offset the decline in sales in North America and South Korea.
However, LG’s focus on lower-end cell phones and the falling handset prices are putting pressure on its profit margin, which fell from 11.5 percent in Q3 2008 to 11 percent in Q2 2009, and further dropped to 8.8 percent in the last quarter. Also, the dip in shipments to North America due to growing demand for smartphones and high-end devices shows a sign that the mid-range handset market is shrinking.
As LG plans to expand investment in both smartphones and low-end phones, it expects steady growth and higher shipments in the last quarter of the year than the third quarter. To prepare for the coming holiday season, it will introduce several new handsets, including its first Android-powered phone, the Etna, and three devices running Windows Mobile operating system.
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