LG Electronics’ third-quarter results are likely to be stronger than previously anticipated thanks to a fall in TV panel prices and favorable won-dollar exchange rates, so it remains to be seen whether such upward momentum is sustainable, according to a Korean financial service provider.
NH Investment & Securities has forecast that LG Electronics’ Q3 sales will hover around 14.1 trillion won (up 0.9 percent q-o-q and down 5.8 percent y-o-y) as previously predicted but its Q3 operating profit will reach 277.9 billion won (up 13.9 percent q-o-q, down 39.7 percent y-o-y), much higher than previous estimates.
Various factors, such as falling TV panel prices, a rebound in the EU and Russia’s demand for home appliances, increasing sales of new LG models and a weak won against the dollar, seem to have played a role in boosting LG’s third-quarter operating profit.
NH Investment & Securities, however, was skeptical about the sustainability of the uptrend. “In the mid and long term, there is a possibility of demand for TVs being offset by that for mobile devices owing to the growing consumption of mobile contents. Meanwhile, new “killer apps” for TVs are unlikely to emerge soon to tip the balance in favor of TVs,” said Kim Hye-yong, an analyst from NH Investment & Securities.
“Though demand recovers to normal levels, rivaling companies’ price undercutting could dent the industry’s overall profitability,” Kim predicted.
