* Q1 operating profit 448 bln won vs 304 bln won fcast
* Handset operating profit 35 bln won vs 10 bln won in Q4
* TV unit operating profit nearly doubles, margins up to 4.1 pct
* LG Elec shares close down 1.3 pct in flat KOSPI
By Miyoung Kim
SEOUL, April 25 (Reuters) - LG Electronics Inc, the world's No.2 television maker, more than trebled its quarterly profit to $393 million on improved margins and a pick-up in high-end TV sales, underscoring South Korea's dominance in an industry once ruled by Japanese rivals.
LG had a more than 13 percent share of the global television market in the fourth quarter, according to DisplaySearch, and will launch a 55-inch flat-screen TV using next-generation organic light emitting display (OLED) technology in Europe next month, earlier than originally planned, a source familiar with the matter told Reuters.
Quarterly profits from the TV division nearly doubled to 217 billion won, and margins jumped to 4.1 percent.
LG expects to sell more of its premium TV models that feature 3D and Internet-enabled functions - TV makers generally hope this summer's Olympics in London and the European soccer championships will provide a sales boost - yet its profit growth is likely to come under pressure in a fiercely competitive handset market, where Samsung Electronics will next week release a 3rd generation of its flagship Galaxy smartphone.
LG's handset business reported a second consecutive profit, of 35 billion won, after six quarterly losses, but profitability remains near breakeven as sales of its Optimus line-up failed to win customers away from the Galaxy and Apple's iPhone.
January-March operating profit jumped to 448 billion won ($392.7 million) 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.
Noting the improved TV profit margins, Kim Ji-san, an analyst at Kiwoom Securities, said: "It's clearly benefiting from new product releases in the high-end sector with 3D sets, and gaining market share from struggling Japanese rivals."
Under CEO Koo Bon-joon, LG, which was founded in 1958 as Goldstar, aims to shift back to technology leadership from a marketing and branding oriented strategy.
LG and Samsung, for now, have taken over as market leaders from Japan, whose consumer electronics giants have been battered by the aggressive competition, weak demand for the TVs they make and a stronger yen that erodes the value of their exports.
Sony Corp, Panasonic Corp and Sharp Corp expect to have lost a combined $21 billion in the business year just ended. "(In the past) if you wanted a top quality TV you had to buy a Sharp, Panasonic or Sony. Those days are gone," said Steve Durose, Senior Director and Head of Asia-Pacific at FitchRatings.
LG doubled its 3D TV market share to 15.3 percent in the fourth quarter from earlier in the year, helped by cheaper and lighter 3D glasses that don't require the batteries and switches used in conventional 3D sets made by Samsung, Sony and others. Sony's share of the 3D TV market tumbled to 13 percent in October-December from 34.6 percent in the first quarter, according to DisplaySearch.
LG Display, which makes flat screens for LG Electronics' LCD TVs, on Tuesday 34.6 percent panel shipments would rise 10 percent this quarter, but acknowledged this was a "very conservative" outlook given the new product releases planned by TV makers.
Kiwoom's Kim said the better handset margins - which improved to 1.4 percent from 0.4 percent in the fourth quarter - came as LG aggressively cut costs even as sales dipped to 13.7 million phones from 17.7 million in October-December.
LG faces 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. Global smartphone shipments are forecast to rise 38 percent to 683 million this year, according to CLSA.
Sales of home appliances such as fridges and washing machines dipped 3 percent due to weak demand in China, but profits jumped 48 percent and margins rose to 6 percent thanks to strong sales of high-end models and price increases.
Shares in LG, valued at close to $12 billion, fell 1.3 percent in a flat market. The stock has dropped 16 percent in 5 weeks, touching a 3-month low on Friday, but jumped 4.8 percent on Tuesday in its biggest one-day gain since Feb. 2.