LG predicts modest mobile phone growth in 2009


Electronics group LG has stated it expects to achieve only a small amount of growth in its mobile phone business in the coming year as the economic downturn suppresses the market for high-price feature phones.

"The pace of growth is set to slow noticeably," said Skott Ahn, president and chief executive of LG's mobile communications unit, adding LG's average handset growth rate of around 30 per cent in previous years would slow to only a "slight" growth in 2009.

"The outlook for next year is changing constantly."

Ahn was speaking at a news conference marking the domestic launch of a new touch screen model featuring the Frankin Planner time management system.

Handset makers had remained relatively unscathed by the global economic crisis so far this year, but a stern warning issued by world handset leader Nokia in Mid-November, following similar guidance from Intel, have signalled rapid weakening of consumer electronics demand.

Research company Gartner said last week that mobile phone sales were set to fall up to 4 per cent in 2009 from this year as the economic slowdown hurts consumer demand across the world.

On Wednesday, Ahn said LG, the world's fifth-largest maker of handsets, would strive to seize the opportunity to raise its global market share to around 10 per cent from its current eight per cent.

He added that LG would not engage in excessive price competition but would focus instead on maintaining profits at an "appropriate" level. He declined to give the company's mobile phone profit margin target for next year.

LG sold 23 million phones in the third quarter, down from a record 27.7 million in the second. It was still aiming to achieve the 100 million phone target set for the year despite an increasingly challenging environment, Ahn said.

"We are experiencing significant difficulties at this time of the year, but we will reach 100 million units at all cost," Ahn said.

LG's operating profit margin on handsets has been steadily falling, from 15.9 per cent in the first quarter to the second quarter's 14.4 per cent and the third quarter's 11.5 per cent.