LG Electronics' Q1 profit down 23% on sluggish demand

SEOUL: LG Electronics on Friday said its operating profit for the January-March period likely declined 23 per cent from a year earlier amid the on-going macroeconomic woes that dampened consumer demand.

The South Korean tech company estimated its first-quarter operating profit at 1.49 trillion won ($1.1 billion), down 22.9 per cent from a year earlier.

Sales decreased 2.6 per cent to 20.41 trillion won. The data for net income was not available.

The operating profit, however, was 20.7 per cent higher than the average estimate, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.

LG's quarterly profit has actually risen from a year ago, considering the 80 billion-won one-off gains from patents licensing the tech firm that were made in the first quarter of last year.

Stabilising material costs and steady sales of high-end home appliances helped the firm achieve the relatively solid earnings results.

LG's TV business likely made a turnaround in the first three months of the year, after making losses for the past three consecutive quarters, thanks to improving TV demand in the European market, LG's biggest OLED TV market, and decreasing inventory levels, as well as marketing costs.

According to market research firm Display Supply Chain Consultants (DSCC), premium TV shipments are estimated to have fallen 14 percent from a year ago in the first quarter, but they are expected to begin increasing in the second quarter.

Analyst Kim Dong-won from KB Securities expected LG's TV business to log 439 billion won in operating profit this year, up a whopping 81 times from a year ago.

The company will release its final earnings report later this month.