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LG to enjoy improved Q1 on home appliances, TVs

All News 15:09 April 08, 2016

By Kang Yoon-seung

SEOUL, April 8 (Yonhap) -- LG Electronics Inc. is estimated to have enjoyed improved earnings for the first quarter, analysts said Friday, on the back of the strong recovery in its sales of home appliances and TVs.

According to the data compiled by Yonhap Infomax, the financial arm of Yonhap News Agency, South Korea's 12 brokerage houses on average estimated LG Electronics' first-quarter operating profit at 433.5 billion won (US$373.2 million), up 42 percent from a year earlier.

The figure will mark the highest amount since the third quarter of 2014, when LG Electronics posted an operating profit of 461.2 billion won.

"The profitability of the home entertainment business is improving on the back of the rising sales of premium TVs, including Ultra HD and organic light-emitting diode (OLED) models," said Park Gang-ho, an analyst from Daishin Securities Co.

Lee Jae-yoon, an analyst from Yuanta Securities Co., said the falling global prices of panels will also reduce the production cost of TVs, leading to improved returns from the business.

The home appliances division is also expected to lend support to the rosy outlook on the back of decreased production costs coupled with the rising seasonal demand for air conditioners, analysts added.

The mobile business, however, is expected to post a shortfall in the January-March period, analysts said, although the segment will also start a recovery in the second quarter on strong sales of the G5 smartphone.

"The combined sales of the G5 is expected to reach 12 million units, hovering far above 10 million posted by the G3 and 5.5 million posted by the G4," said Soh Hyun-chul, an analyst at Shinhan Investment Corp. "In the second quarter, the mobile communications sector will turn to profit."

LG's mobile business had posted an operating loss of 43.8 billion won in the fourth quarter of 2015.


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