LG Electronics Q1 profit edges up; handset business weighs

LG Electronics Q1 profit edges up; handset business weighs

Seoul: LG Electronics, the world’s No.2 TV maker, posted a small increase in quarterly profit as strong sales of flat-screen TVs, fridges and washers countered the impact of a dismal performance from its struggling handset division.

Strong sales of flat-screen TVs should drive earnings growth at LG this year as consumer spending improves in a global economic recovery. The overall outlook for the company, also the world’s No.3 handset maker, however hinges largely on when and how strongly its handset division regains its lost momentum.

LG trails Nokia and Samsung Electronics Co. Ltd in mobile phones and competes with Sony Corp. and Panasonic Corp. in flat-screen TVs.

“We aim to boost second-quarter mobile phone shipments by a double digit percent from the first quarter and improve profitability with high-end models such as smartphones," LG said in a statement.

LG’s business momentum has turned weaker since late last year as its handset unit struggles with delayed product launches, a lack of hit models and the firm’s slow response to the booming smartphone market, in which LG has less than 1% global market share.

The South Korean firm reported a global-basis operating profit of 489 billion won ($440.5 million) in January-March, versus 467 billion won a year ago and a consensus forecast of 497 billion won as per analysts polled by Thomson Reuters.

Mobile phone sales dropped to 27.1 million units from 34 million handsets sold in the fourth quarter and handset operating profit margins fell to 0.9% from 6.4% a year ago.

By 0420 GMT, LG shares were trading up 1.2% at 129,500 won. The stock has risen 5.3% so far this year, versus a 4 percent gain in the wider market.

LG has shifted focus to smartphone offerings to boost razor-thin margins and catch up with bigger rivals such as Apple.

Ahead of its results announcement, LG was forecast to report a 2.7 trillion won global operating profit for 2010.