LG Electronics Posts 2Q Profit

LG Electronics Inc., South Korea's largest maker of consumer appliances and a major producer of cell phone handsets, said Thursday it swung to a profit in the second quarter on strong sales of appliances and premium mobile phones.

The company, who brands include the Chocolate and Shine mobile phones, earned 385 billion won ($420 million) in the three months ended June 30 in contrast to a loss of 9.7 billion won a year ago.

Total sales rose 1.7 percent to 5.9 trillion won ($6.4 billion) from 5.80 trillion won a year ago. On a consolidated basis, which includes performance overseas subsidiaries, LG had sales of 10.4 trillion won ($11.3 billion), 12.6 percent higher than the previous year.

Handset sales rose 27 percent to 2.7 trillion won ($2.9 billion) from a year ago. LG shipped a record 19.1 million phones in the quarter for a total of 34.9 million in the first half.

LG said it sold 12 million of its Chocolate phones in the quarter and 2.5 million of the Shine. The company does not disclose sales figures for its Prada phone, produced in partnership with the Italian fashion brand.

The company, the world's fifth-biggest handset maker, said its operating profit margin of 11.6 percent in its cell phone division was an all-time high.

"There was pretty much growth in every segment," said Steve Oh, a technology analyst at Deutsche Bank Securities, referring to LG's handsets offered in wireless technologies CDMA, GSM and WCDMA.

CDMA, or code division multiple access, is used in the United States and South Korea. It is a rival standard to the dominant GSM, or global system for mobile communications, used widely in Europe. WCDMA, or wideband CDMA, is the most highly developed in terms of data transmission.

LG's Shine phone stood out in CDMA and GSM, Oh said, while the Chocolate was a hot seller in the WCDMA format.

The Prada had yet to have much of an impact on LG's bottom line, but would likely play a bigger role in the second half of the year, he said.

LG launched the Prada earlier this year. It features a no-button interface with the front covered by a touch-sensitive screen resembling the Apple iPhone.

Sales of home appliances such as refrigerators and washing machines also gained, rising 21.4 percent on year to 3.6 trillion won ($3.9 billion).

Sales of digital displays, mostly televisions and computer monitors, declined 2.1 percent from the previous year to 2.7 trillion won ($2.9 billion).

The net profit was better than expected. The average estimate of nine analysts surveyed by Dow Jones Newswires forecast that the company would post a net profit of 236.5 billion won ($257.8 million).

Shares in LG, which released the earnings toward the end of the session, finished 1.7 percent higher at 73,800 won ($81).