South Korea's LG Electronics Inc, the world's No.2 TV manufacturer and fifth-biggest mobile maker, more than trebled its quarterly profit as TV sales picked up and its handset business swung to a profit.
Despite increasing sales of premium TV models that feature 3D and Internet-enabled functions, LG Electronics' profit growth is likely to come under pressure as competition gets tougher in the handset market. Samsung Electronics Co <005930.KS>, the world's top smartphone maker, is due to release a third generation of its flagship Galaxy smartphone next week.
LG's handset business reported a second consecutive profit after six quarterly losses, marking a sharp improvement from a 100 billion won loss a year ago, but profitability remains near breakeven as sales of its Optimus line-up failed to win customers away from the Galaxy and Apple's iPhone.
LG is also coming under increasing competition in the low end handset market from China's Huawei Technologies and ZTE Corp, which already outsell the South Korean firm in major markets, according to analysts. ZTE said this week it could be shipping 100 million smartphones a year by 2015. A total of 472 million smartphones were sold around the world last year, according to research firm Gartner, and Credit Suisse has forecast sales will top 1 billion by 2014.
LG's January-March operating profit jumped to 448 billion won from 131 billion won a year ago, and comfortably beat a consensus forecast for 304 billion won profit by Thomson Reuters I/B/E/S. Profit in October-December was 23 billion won.
Profits from the TV division nearly doubled to 217 billion won, and margins jumped to 4.1 percent.
In TVs - where LG had a more than 13 percent share of the global market in the fourth quarter of last year, according to DisplaySearch - the South Korean firm will launch a 55-inch flat TV using next-generation organic light emitting display (OLED) technology in several European countries in late May, well ahead of an original plan to launch in the second half, a source familiar with the matter told Reuters.
Shares in LG, valued at close to $12 billion, rose 1.5 percent on Wednesday after the earnings release, while the broader market gained 0.4 percent. The stock has dropped 16 percent in the past 5 weeks, touching a 3-month low on Friday, but it jumped 4.8 percent on Tuesday in its biggest one-day gain since February 2.