LG's earnings top Samsung's for first time in 14 years

An LG Electronics advertising sign in New York's Time Square [LG Electronics]

LG Electronics reported better-than-expected profit in the first quarter as strength in its automotive business and cost-cutting efforts buffered weakness in its home appliance business.

In the earnings guidance released Friday, the electronics maker projected an operating profit of 1.5 trillion won ($1.1 billion), down 22.9 percent on year. The result was higher than a market consensus of 1.1 trillion won, which was compiled by FnGuide.

The company earned more than Samsung Electronics for the first time in 14 years.

Sales decreased 2.6 percent to 20.41 trillion won, lower than the market estimate of 20.75 trillion won. Net income was not available.

Stabilizing material costs helped the company achieve the relatively solid earnings results.

LG Electronics said the company's efforts, such as reducing shipping costs and restructuring its business portfolio, to "preemptively" deal with slowing demand amid economic uncertainties helped it navigate various challenges.

The TV business likely achieved a turnaround in the first three months of the year, after a losses in the previous three consecutive quarters, on solid demand in Europe, LG's biggest organic light-emitting diode(OLED) TV market, decreasing inventory levels and lower marketing costs.

According to Display Supply Chain Consultants (DSCC), premium TV shipments are estimated to have fallen 14 percent from a the year earlier period in the first quarter, but they are expected to begin rising in the second quarter.

Analyst Kim Dong-won from KB Securities expects the company's TV business to log 439 billion won in operating profit this year, up 81-fold on year.

LG Electronics did not offer a breakdown of division performance, but most of them, including the electric vehicle (EV) parts business, were profitable in the first quarter, according to analysts.

In the fourth quarter of last year, the EV parts business was profitable, 10 years after LG Electronics entered the market.

While demand for consumer gadgets and home appliances is still sluggish, the business solutions division, which covers energy-efficient heat pumps, among other things, is believed to have expanded significantly.

The company will release its final earnings report later this month.

BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]