LG Electronics beats second-quarter estimates as mobile division turns profit

Reuters News
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Posted: Jul 24, 2014 2:09 AM

SEOUL (Reuters) - LG Electronics Inc reported on Thursday its strongest quarterly profit in more than three years, beating analyst estimates thanks to a pickup in television sales and a turnaround in its mobile phone business.

The world's second-largest TV maker after local rival Samsung Electronics Co Ltd said profit at its TV arm improved in April-June from a year earlier, while its smartphone shipments rose 20 percent to a record 14.5 million handsets.

The global TV market is showing signs of life as demand from advanced markets picks up, with sales of larger-sized ultra high-definition (UHD) TVs widely seen as a potential boost. But LG and market analysts said a likely rise in marketing costs by TV makers may limit the extent of any earnings boost.

"The results were better than expected," said HMC Investment analyst Greg Roh. "A key factor to watch is how well the G3 smartphone fares in the United States, but the outlook appears to be bright given the second-quarter numbers."

For the April-June period, LG Electronics reported an operating profit of 606 billion won ($589.04 million), compared with a 524 billion won mean estimate of 39 analysts polled by Thomson Reuters I/B/E/S.

That was LG's best operating profit since at least 2011. The company restated its earnings last year due to accounting changes and did not have new figures available for 2010 or earlier, said a company spokeswoman.

Shares of LG Electronics were trading up 4.6 percent as the wider market traded flat, extending gains following the company's earnings disclosure.

LG's TV division reported operating profit of 154.5 billion won, up from 93.7 billion won a year earlier on an improved product mix and lower fixed costs.

The mobile phone division turned an operating profit of 85.9 billion won, from a 61.2 billion won profit a year prior. The company said sales of smartphones featuring Long-Term Evolution (LTE) communication technology rose sharply due to new products including the G3 high-end smartphone.

The G3 smartphone launched in late May to generally positive reviews, boosting hopes for a turnaround for the handset division as the product began selling in major markets such as the United States and Europe earlier in July.

($1 = 1028.8000 Korean Won)

(Reporting by Se Young Lee; Additional reporting by Narae Kim; Editing by Christopher Cushing)