LG sees Q1 profit rise 21% but COVID-19 concern lingers

Profits and sales are expected to drop across the board in the second quarter from the global pandemic.

LG Electronics has posted an operating profit of 1.09 trillion won from revenues of 14.72 trillion won in the first quarter of 2020, the company said.

It is a rise of 21% and a fall of 1.3% from a year prior, respectively.

The home appliance business led the way, contributing 753 billion won in operating profit -- the highest ever for a quarter from the business.

Sales were especially high in South Korea due to consumer interest in health and hygiene, but this was partially offset by a sales decline from abroad due to the COVID-19 pandemic, LG said.

Meanwhile, LG's mobile business yet again saw an operating loss. For Q1, the mobile business experienced 238 billion won in operating losses, which was 16.9% worse than the loss posted a year prior. It also marked the 20th straight quarter of the mobile business being in the red.

The global pandemic has caused supply issues from its Chinese contract phone makers and store shutdowns in Europe and Latin America, further exasperating the business' performance, LG said.

On the other hand, the company's TV business posted operating income of 326 billion won, a rise of 31.7%, and somewhat of a return to form for the business. LG said it reduced costs and its high-end products sold solidly during Q1.

However, in a conference call, much like its compatriot Samsung, LG executives warned that the second quarter would likely see profit and sales declines across the board from the effects of COVID-19.

Smartphone and TVs will be especially affected by a big drop in demand, they said.

LG said it would reduce costs in producing its next flagship phone, the LG Velvet. The phone will launch in mature 5G markets such as South Korea, the US, and Japan in a bid to bring the business back into profitability, the company noted, while TV sales will be directly impacted by the cancellations of large sporting events.

RELATED COVERAGE

LG names next flagship phone Velvet

Each of LG's upcoming phones will have their own names, and the G and V brands will be dropped.

LG Velvet smartphone to get online reveal on May 7

The unveiling event will be held online due to the COVID-19 pandemic.

LG Velvet smartphone shown in full in new video teaser

The new phone is shown to be powered by the Snapdragon 765 5G and carries a headphone jack.

LG CNS trials facial payment service using digital currency

Payments will be made through a registered digital currency.

Flying in style: You could be watching a 65-inch OLED TV on your next flight thanks to LG Display (TechRepublic)

At CES 2020, LG Display showed TechRepublic several use cases for its latest OLED displays in the retail, automotive, and airline industries.