LG enjoys boom in large screen TVs from Winter Olympics, World Cup
LG Electronics, the world's No 2 television maker, posted first-quarter operating profit that almost doubled analyst estimates as global sporting events spurred demand for large-screen sets with sharper displays.
Operating profit, or sales minus the cost of goods sold and administrative expenses, was 504 billion won (HK$3.76 billion) compared with the 285.4 billion won average of 26 analyst estimates.
Net income, excluding minority interests, rose to 74.9 billion won in the three months ended March 31 from 24.2 billion won a year earlier, the Seoul-based company said.
This year's Winter Olympics and soccer World Cup have spurred television sales and helped LG withstand stalling demand across the industry as it adds televisions with flexible screens and ultra high definition technology. The rebound in its biggest business comes as LG benefits from lower manufacturing costs, releases new high-end smartphones and increases sales of household appliances and air conditioners.
"The TV business led its first-quarter earnings," said William Park, a Seoul-based Daewoo Securities' analyst, before the earnings release. "Profits from TVs will remain strong well into the second quarter with Korean companies likely to outperform their rivals."
LG's mobile division posted an operating loss of 8.8 billion won in the three months ended March, on shipments of 12.3 million smartphones.
State-imposed curbs on South Korean wireless operators are cutting high-end device growth at home, while LG is reshaping its strategy in China by scrapping sales of lower-priced smartphones as it struggles to compete with Lenovo, Huawei Technologies and Xiaomi.
LG released its 5.5-inch 4G smartphone through China Mobile in February to bolster sales through the world's largest carrier. LG was ranked fourth in the global smartphone market last year with a 4.7 per cent share. Samsung led, followed by Apple and Huawei.
The home-entertainment division, which makes televisions and accounted for about 36 per cent of revenue last year, had an operating profit of 240.3 billion won in the quarter. LG plans to release 12 new models with ultra HD displays this year.