Yahoo Finance LG's Profit Falls Despite Strong Phone Sales
LG Electronics (KSE: 066570.KS - news) has reported a fall in quarterly profit, despite a strong recovery in its smartphone business.
The South Korean company said new models helped push smartphones sales to a record 10.3 million units over the three months to March.
The figures make LG (KSE: 003550.KS - news) the world's third biggest maker of the phones by sales - overtaking Taiwan's HTC - although its market share of 3.3% remains significantly below that of rivals Apple (NasdaqGS: AAPL - news) and Samsung.
But LG's television business struggled in the last quarter, as tough global economic conditions hit demand.
Tough competition from companies including Samsung also contributed to an 82% fall in profit at its Home Entertainment division.
The difficult market has already caused Japanese rivals Sony (Xetra: 853687 - news) and Panasonic to downsize their television businesses.
Operating profit at LG dropped by 13% when compared to the year before to 349bn won (£203.9bn) - its first fall in five quarters.
It comes after US technology giant Apple reported its first fall in profits for nearly 10 years , despite strong iPhone sales.
Looking ahead, LG said earnings would improve as it released new smartphone models and revamped televisions.
"Since the third quarter of last year, market demand for TVs slowed, intensifying competition and driving down prices as a result," the company's chief financial officer Jung Do-hyun said.
"We expect that profitability will recover in the second quarter as new models help recover prices."
But he warned that worldwide demand for televisions was expected to remain muted this year, as many consumers already own a flat-screen television.
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