LG Electronics' 4Q Profit Down 85 Pct.

SEOUL, South Korea (AP) -- Fourth quarter profit at LG Electronics Inc., South Korea's largest consumer appliance maker, plunged 85 percent amid falling sales and price declines for flat-screen televisions, the company said Tuesday.

LG Electronics, also a leading manufacturer of mobile phone handsets, earned 48 billion won ($51.2 million) in the three months ended Dec. 31, the company said in a statement, down sharply from the same quarter a year ago.

Still, the result was better than expected. Analysts had predicted the company would post a net loss of 7.6 billion won ($8.1 million) in the quarter, according to a Dow Jones Newswires survey.

Sales at the Seoul-based company fell 11 percent to 5.52 trillion won ($5.87 billion).

Consumer electronics companies like LG have been hit by intense competition that has forced price cuts even as unit sales increase.

Samsung Electronics Co. said earlier this month that fourth-quarter profit fell 8 percent amid price declines for liquid crystal displays used in flat screen televisions and personal computers.

For LG Electronics, sales in its digital display business, which includes flat-screen TVs, declined 14 percent to 1.2 trillion won ($1.3 billion) amid "intensified price erosion," the company statement said.

"Severe competition with LCD panels in (the) 40-inch segment" resulted in a decline in shipments of plasma panels, the company said.

Demand for televisions, however, was strong, with the company reporting that shipments of plasma and LCD televisions rose 55 percent and 72 percent respectively from the previous quarter.

LG Electronics' panel problems were foreshadowed last week when LG.Philips LCD Co., a joint venture between LG and Philips Electronics NV of the Netherlands, reported its third straight quarterly loss amid a decline in TV panel prices.

LG Electronics, the world's fifth-largest mobile phone manufacturer, said that operating profit -- sales minus the cost of goods sold -- in its handset business fell 70 percent from the same period in 2005, hit by price cuts. The company did not provide a net profit figure in its release.

For all of 2006, LG Electronics said that new profit dropped 70 percent to 212 billion won ($226 million). Sales fell three percent to 23.2 trillion won ($24.7 billion).

Shares in LG Electronics, which released earnings results about 50 minutes before the stock market closed, fell 0.9 percent to close at 53,000 won ($56).

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