LG Electronics estimates first quarter profit surged, likely best in nearly eight years

FILE PHOTO: A man looks at LG Electronics' TV sets, which are made with LG Display flat screens, at its store in Seoul, South Korea, April 26, 2016. REUTERS/Kim Hong-Ji/File Photo

SEOUL (Reuters) - South Korea's LG Electronics Inc 066570.KS estimated on Friday its first-quarter operating profit rose 82 percent to its highest in nearly eight years, handily beating market expectations on healthy sales of appliances and televisions.

LG, the world's No. 2 television maker behind Samsung Electronics Co Ltd 005930.KS, said January-March operating profit was likely 922 billion won ($812.62 million), compared with an average forecast of 518 billion won from a Thomson Reuters I/B/E/S survey of 24 analysts and the highest since the second quarter of 2009.

Revenue for the quarter likely rose 9.7 percent to 14.7 trillion won, the firm said.

“Generally speaking I think the improved product mix in appliances and televisions and the company’s efforts to sell high-end products lifted profits,” HI Investment analyst Song Eun-jeong said.

Earlier in the day, Samsung estimated the January-March period will produce its best quarterly profit in more than three years, beating expectations and putting it on track for record annual earnings on the back of a memory chip super-cycle.

Though LG did not elaborate on its forecasts, analysts say LG’s mobile business likely turned an operating loss for the eighth-straight quarter. Sales of its new G6 flagship smartphone began in March and likely will not provide meaningful contributions until the second quarter.

Still, some analysts said losses likely were smaller in January-March as LG’s new lower-tier products fared better and the company reduced marketing spending. “Both the home appliances and the TV market will enter a seasonally strong period during the second quarter,” Song said, adding the biggest short-term variable for LG’s earnings will be how the G6 fares in overseas markets such as the United States.

LG shares rose 0.4 percent on Friday, outperforming a 0.1 percent drop for the broader market .KS11.

Reporting by Se Young Lee; Editing by Randy Fabi and Muralikumar Anantharaman