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(2nd LD) LG Electronics' net soars in Q1 on premium products

All News 16:46 April 28, 2016

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By Kang Yoon-seung

SEOUL, April 28 (Yonhap) -- South Korea's No. 2 tech giant LG Electronics Inc. said Thursday its first-quarter net profit jumped nearly five-fold from a year earlier, apparently helped by improved sales of premium home appliances and TV products.

Net profit came to 198.1 billion won (US$174 million) in the first quarter, compared to the 38.4 billion won posted a year earlier, the company said in its regulatory filing.

Operating profit came to 505 billion won in the January-March period, up 65.5 percent from last year. Sales moved down 4.5 percent over the cited period to 13.3 trillion won.

The result is in line with the earnings guidance released earlier this month.

LG Electronics said its sales moved down on-year due to the slowed growth of the global TV and smartphone market.

Operating profit, however, boasted strong growth as the profitability of the company's home appliances and TV segments improved.

LG Electronics said the home appliance arm posted an operating profit of 407.8 billion won, up 77.7 percent from a year earlier as the company was able to cut production costs, while the portion of premium products in its shipments also increased over the cited period.

The mobile business, which covers smartphones, however, posted an operating loss of 202.2 billion won.

LG Electronics attributed the sluggish returns to the economic slump at emerging markets including South America, while some users delayed their purchase of its handsets ahead of the release of the flagship G5 smartphone.

The marketing expenditures for the promotion of the G5 smartphone, which went on full-fledged sales in the second quarter, were also reflected on the January-March report.

LG Electronics sold 10.5 million units of long-term evolution (LTE) powered smartphones in the first quarter, up 78 percent from a year earlier, although it edged down 3 percent on-quarter. The combined shipment of smartphones came to 13.5 million units.

The home entertainment business posted an operating profit of 335.2 billion won, returning to profit from a year earlier. LG said the turnaround was made possible through premium models including Ultra HD TVs.

The home appliances and home entertainment divisions' first-quarter earnings marked record high figures on a quarterly basis.

For the second quarter, LG Electronics said it will continue efforts to expand sales of premium products to sustain profitability.

The full-fledged sales of the G5 smartphone, along with launch of budget models, will lend support to "normalize" its earnings, the company added.

LG said it sold 1.6 million units of the G5 smartphone in the first month since its launch, hovering above the 900,000 units posted by the G3 smartphone in 2014. The company added it is expected to sell more than 3 million units of the device in the second quarter.

LG said while it expects the global TV market to remain sluggish, the demand for premium products will continue to increase down the road.

Shares of LG Electronics closed unchanged from the previous session at 58,200 won on Thursday, when the benchmark KOSPI lost 0.72 percent. The first-quarter result was released after the trading session.

colin@yna.co.kr
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