On April 26, LG Innotek (CEO: Hur Young -ho) announced its performance for the 1st quarter, which has far exceeded market expectations.
The company recorded sales of \774.9 billion and an operating profit of \42.4 billion under the IFRS (International Financial Reporting Standards) for the 1st quarter of 2010. In terms of sales, it achieved an 81.1% year-on-year increase, or a rise of 7.4% from the previous quarter, and turned around its operating profit.
The market estimation of LG Innotek’s operating profit for the 1st quarter ranged from \25 – 35 billion.
“We were able to achieve this management performance, which has far outstripped market expectations, because we achieved a turnaround by conducting highly intensive cost reform activities while responding to the explosive increase in the demand for LED Backlight Units for TVs even during the 1st quarter, an off-season period,” said an official at LG Innotek.
Analysts say that the company’s achievements with regard to its improvement of the profit structure of the display and network business, including power modules and tuners, have also contributed to the rise in operating profit.
Meanwhile, LG Innotek applied the same accounting standards to past data for comparison performance, when it announced its performance for the 1st quarter of this year on the basis of interim financial statements under the IFRS.
Performance for Each Business Field
In the LED (Light Emitting Diode) business, the company recorded sales of \155.1 billion, marking a 47% increase from the previous year, or 218% year on year, on the back of its active response to a sharp increase in demand for LED BLUs for TV sets. It has also succeeded in turning around its operating profit six months ahead of market expectations, primarily by pushing through a highly intensive cost reform aimed at improving the income and loss structure
In the DN (Display and Network) business, the company has improved the product portfolio – including digital tuners and power modules – in order to respond to an increase in demand for TV sets driven by economic recovery, and recorded sales of \236 billion, i.e., a 5% increase from the previous quarter or a 1% year-on-year rise.
In the PCB (Printed Circuit Board) business, the company was able to expand its sales of high-value-added products thanks to higher orders from strategic customers, and recognized product profolio, achieving sales of \169 billion, up 4% and 20% respectively from the previous year and quarter.
In the SD (Semiconductor and Display) business, the company expanded sales of its premium product groups, including tape substrates and photomasks, to record sales of \117.6 billion, representing an increase of 13% year on year or 0.3% from the previous quarter.
In the Motor and Vehicle Component business, sales decreased from the previous quarter due to a fall in demand for optical disc drive motors. However, the new growth engine field, including vehicle parts, posted a good performance, with total sales standing at \51.3 billion, showing an increase of 3% from the previous year.
In the Mobile business, the company recorded sales of \54.6 billion, a decrease of 1% from the previous quarter caused by the drop in orders from strategic customers; however, this was offset by an increase in demand for high-value-added product lines, such as touch windows, driven by the expansion of electrostatic touch-type mobile sets.
LG Innotek estimates that the demand for LEDs will continue to rise for the 2nd quarter, too, so it plans to expand its production capacity and propel growth in its sales and operating profits by introducing new products and pushing ahead with cost reforms.
Furthermore, the company will try to promote its profit-generating power and enhance its global competitiveness by expanding its product portfolio and strategic customer base, with the aim of eventually securing a business constitution sufficiently strong to cope with changes in the business environment.
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LG Innotek’s Performane for the 1st Quarter
Unit: \0.1 billion, %
LG Innotek’s Performance for the 1st Quarter
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1Q, ’10
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1Q,’09.
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Year-on-year Rate
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4Q,’09
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Year-on-year Rate
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|
Sales
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7,749
|
4,279
|
81.1
|
7,216
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7.4
|
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Operating Profit
|
424
|
128
|
231.2
|
-143
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Make a turnaround
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