LG Elec Q1 profit drops, TV pain outweighs phone revival

SEOUL, April 24 Wed Apr 24, 2013 1:13am EDT

SEOUL, April 24 (Reuters) - LG Electronics Inc, the world's No.2 TV maker, said quarterly profit fell 13 percent as sharp price cuts resulted in razor-thin margins for its TV division, overshadowing a strong recovery in smartphones.

January-March operating profit fell to 349 billion won ($311.3 million), above a consensus forecast for 289 billion won from 35 analysts surveyed by Thomson Reuters I/B/E/S.

The profit compares with 402 billion won a year ago and 117 billion won in the previous quarter.

Since late last year, LG and bigger rival Samsung Electronics Co have had to contend with unfavourable currency rates that benefit Japanese rivals, while global demand for TVs is expected to plateau this year as many consumers in developed countries already own a flat-screen TV.

Its TV troubles may not match the dire straits faced by Sony Corp and Panasonic Corp, both of which are downsizing their television businesses, but LG's profit margins have slipped to below 1 percent since the third quarter, compared with nearly 6 percent in the second quarter of last year.

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