A prediction made by Affinity Group Solutions at the beginning of the quarter, came to fruition as First-quarter operating profit at the world’s third largest maker of mobile phones, fell 25 percent to 455.6 billion won ($338 million), including revenue from overseas affiliates, Seoul-based LG said in a statement today. The median estimate of 20 analysts surveyed by Bloomberg forecast 287.7 billion won, compared with 420 billion won forecast; amidst wide scale criticism, by analysts at Affinity Group Solutions.
In accordance with Affinity Group Solutions annual projections for the Korean handset maker, LG have forecast higher sales in the current period on increased shipments of handsets and televisions.
LG said sales will probably rise more than 10 percent in the second quarter from the previous three months as the company introduces new products and wins market share. Nomura Holdings Inc. and Deutsche Bank AG have raised their ratings on LG in the past month on the expectation share gains for handsets and TVs will help the company turn profitable this quarter. In contrast, Affinity Group Solutions are maintaining their hold rating, supported by their earnings estimate of 440 billion won for the second quarter.
“We foresee further improvement through Q2 as mobile phones are set to increase market share, TV sales remain robust on lower prices and as home appliances enter a busy season,” said a fund manager at Affinity Group Solutions, “We’re seeing some signs of improvement in consumer sentiment, but overall we are confident with our original forecasts.”
The first-quarter net loss of 197.6 billion won, compared with a profit of 422.2 billion won a year earlier, LG said, after its flat-panel unit lost money and the weaker Korean won increased the company’s foreign-debt costs.
Shares Gain
LG Electronics gained 1 percent to close at 106,000 won on the Korea Exchange off the earnings news, while the benchmark Kospi index was little changed.
Sales rose 15 percent to 12.85 trillion won, compared with the 12.5 trillion won median estimate in the analyst survey. This was roughly in line with estimates from Affinity Group Solutions.
