​LG expects 65 percent profit jump in Q1, more from G5 in Q2

The electronics company anticipates its biggest profit in two years for the first quarter of 2016 with a jump of 65 percent, while G5 sales are expected to help mark record earnings for the second quarter.
Written by Cho Mu-Hyun, Contributing Writer

LG Electronics expects its biggest profit in seven quarters for the January-March period of 2016, it said in its earnings guidance.

South Korea's second-largest electronics maker has predicted an operating profit of 500.52 billion won ($440 million) and revenue of 13.362 trillion won ($11.7 billion).

The profit is a jump of 65.5 percent and exceeds that of the local analyst consensus of 426.6 billion won, and its biggest since the second quarter of 2014.

The number doesn't include the earnings from the G5 -- global sales of which began March 31 -- which increase expectations of a similar or even better profit for the second quarter.

"LG's home appliance and TV and must have posted a historic profitability," said Kim Ji-san, an analyst at Kiwoon Securities, in a note to clients. "Second quarter expectations are also bright. A operating profit of 612.3 billion won is expected, its biggest since 2009."

"Home appliance and TV will remain positive and its handset business will turn to the black thanks to the G5. The G5 will sell 8 million units within the year," he added.

Home appliances is likely to have contributed the lions share, thanks to the popularity of its premium line-up that sold well even with a high price tag; while in TVs, the price drop in Liquid Crystal Display (LCD) panels helped save costs.

Its mobile business posted loss in the third and fourth quarter last year, and will likely again for the first quarter of this year, due to offloading remaining stocks of G4 and V10 and marketing for the G5.

But according to Youanta Securities analyst Lee Jae-yun, "G5 sales will improve dramatically compared to the previous year's flagship models, helping [the handset business] turn to the black".

LG is heavily promoting the modular phone and its accompanying accessories LG Friends. It also held a developers conference in Seoul last month where it released the SDK and HDK for the smartphone and modules.

South Korean analysts expect it to be the company's best-selling smartphone ever.

Meanwhile, this is the first time LG has announced a preliminary earning guidance. Compatriot Samsung has been publishing them since 2009 and announced its own last week.

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