LG Electronics’ Q1 net profit soars on-year

SEOUL, South Korea's No. 2 tech giant LG Electronics Inc. said Thursday that its first-quarter net profit posted more than four-fold growth from a year earlier following strong returns in the home appliance business.

Net profit came to 835.6 billion won (US$739.4 million) in the first quarter, compared to 198 billion won posted a year earlier, the company said in a regulatory filing.

Operating profit reached 921.5 billion won in the January-March period, also marking an 82.4-percent jump over the cited period. Sales came to 14.6 trillion won, up 9.7 percent on-year.

The final performance came in line with LG Electronics' estimate report released earlier this month, when the company said the operating profit was presumed at 922 billion won.

The latest operating profit marks the second highest quarterly performance ever posted by LG.

The company said the robust report was made possible by the home appliance and air solution division, which posted an operating profit of 520.8 billion won, up 28 percent from a year earlier.

As for the mobile communications division, LG said the business posted an operating loss of 200 million won, although sales advanced 2 percent on-year to reach 3 trillion won on the back of the release of its G6 flagship smartphone.

The mobile division's operating loss also marked a significant improvement from the loss of 202.2 billion won posted a year earlier.

LG said it has been struggling to improve profitability by releasing budget smartphones. The company said the G6 smartphone also received favorable feedback from the South Korean and U.S. markets.

Over the first quarter, LG said its shipment of smartphones reached 148 million units, up 10 percent from a year earlier.

LG said its budget X and K smartphones continued to gain popularity in the market, while sales of premium smartphones also improved on the back of demand for the G6 and V20 devices.

Smartphones running under the long-term evolution network also accounted for 90 percent of its handset sales.

The home entertainment business posted an operating profit of 382.2 billion won, up 14 percent on-year. LG said while demand in emerging markets remained sluggish, shipments to the North American and Latin American markets gained ground.

The division's profitability also improved due to the increased sales of premium models such as OLED TVs and Ultra HD TVs.

The vehicle components division continued to post an operating loss of 14.5 billion won, it said.

For the second quarter, LG Electronics said it expects the smartphone market to become much more contested following the release of rivals' products.

Accordingly, LG said it plans to complete the global release of the G6 smartphone by the end of May.

The home appliance business is set to experience an increase in seasonal demand in the second quarter, casting a brighter outlook over the sector.

LG said it plans to continue generating stable profits in the home appliance business by expanding the sales of premium products.

As for the shipment of TVs, LG said it expects the demand in the North American, Latin American, and Asian markets to continue moving up despite the industrywide slump.

Shares of LG Electronics closed at 72,300 won on Thursday, down 0.55 percent from the previous trading session. The earnings report was released before the market closed.

Source: Yonhap News Agency

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