LG Electronics Inc., the world's second-largest television maker, posted a 91 percent drop in first-quarter profit as a stagnant market hurt TV sales. The shares fell.
Net income fell to 22.1 billion won ($20 million) in the three months ended March 31 from 247.5 billion won a year earlier, Seoul-based LG said in a statement Wednesday. That compares with the 208.7 billion-won average of 23 analyst estimates compiled by Bloomberg. Sales increased to 14.1 trillion won from 13.2 trillion won.
Profit at the TV-making unit declined from a year earlier as demand for plasma-display sets decreased, LG said in the statement. LG, which trails Samsung Electronics Co. in TV shipments, has said it plans to increase deliveries 15 percent this year by offering sets with new display technologies and more advanced functions.
"LG lagged behind Samsung in the high-end TV race while it also was pressured by some players like Vizio in the lower-end category, forcing it to cut prices," Kwon Sung Ryul, a Seoul-based analyst at Dongbu Securities Co., said before the earnings release. "A strong TV rebound isn't likely this year. Only about a low-single percentage growth is expected at best."
LG fell 0.4 percent to 90,000 won as of 2:41 p.m. in Seoul, compared with a 0.9 percent gain in South Korea's benchmark Kospi index. The shares have gained 22 percent this year.
Operating profit fell to 349.5 billion won from 401.7 billion won a year earlier, LG said. Revenue increased mainly because of improved earnings at the company's mobile business, the company said.
Sales of LCD TVs increased in Europe and emerging markets including China, LG said.
LG said Jan. 2 it started selling a 55-inch TV set with a display using organic light-emitting diodes, or OLEDs, in South Korea for 11 million won, giving the company a head start in mass-marketing the technology. The company will expand OLED TV sales to North America, Europe and other Asian markets in the first quarter, it said at the time.
Suwon, South Korea-based Samsung said Feb. 19 it aims to start selling OLED TVs in the first half of this year.
TVs with OLED screens offer sharper and brighter images than current liquid-crystal-display models and consume less power. They are also thinner as they don't require the use of a backlight.
LCD Shipments Worldwide shipments of LCD sets, the biggest TV segment, fell for the first time in 2012, NPD Group Inc.'s DisplaySearch said on March 21. The global average selling price for flat- panel TVs declined 2 percent, the Santa Clara, California-based researcher said.
Global deliveries may increase 7 percent to 216 million units in 2013, DisplaySearch said on March 13.
LG shipped 10.3 million smartphones including its flagship Optimus models in the first quarter, boosting revenue from the business 29 percent from a year earlier, the company said. Operating profit at the unit increased almost fourfold to 133 billion won.
Park Jong Seok, head of the company's mobile-communications division, said in February LG plans to boost smartphone sales to 40 million units this year from 26.3 million in 2012, helped by rising demand in emerging markets.
LG released its upgraded flagship smartphone, the Optimus G Pro, in South Korea on Feb. 20 as it seeks to regain market share lost to Apple Inc. and Samsung. LG also is rolling out a cheaper Optimus series to compete with fast-growing Chinese manufacturers.
The Optimus G Pro features Google Inc.'s Android operating system, a Qualcomm Inc. quad-core processor and a 13-megapixel rear-facing camera. The device also has a function that lets users record from the front and rear cameras simultaneously.