LG Electronics Inc., South Korea's No. 2 tech giant, said Wednesday its first-quarter net profit fell 58.5 percent on-year as its home entertainment business offset relatively robust smartphone sales.
  

Net profit came to 38.4 billion won ($35.9 million) in the January-March period, plunging from a profit of 92.5 billion won posted a year earlier, LG Electronics said in a regulatory filing.
  

Operating profit came to 305.2 billion won, also down 36.2 percent from the 478.7 billion won posted a year earlier, while sales remained almost flat on-year at 13.9 trillion won.
  

The operating profit was well above the median estimate of 290.4 billion won in a poll of 12 brokerages conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency, on Friday. The sales, however, hovered below the consensus of 14.6 trillion won. 
  

LG Electronics said although its operating profit advanced 11 percent on-quarter, its earnings were dented on-year due to the falling demand and unfavorable currency rates.
  

By sector, LG said its home entertainment business suffered an operating loss in the first quarter, due mainly to the unfavorable foreign-exchange conditions in Brazil and Russia.
  

The division's revenue also dropped 5 percent on-year to reach 4.43 trillion won in the first quarter, LG Electronics said.
  

Its mobile communications business, which oversees smartphone segment, however, logged an operating income of 72.9 billion won, with its sales advancing 5 percent on-year to 3.59 trillion won.
  

"It marks the highest revenue since the first quarter of 2010, when LG first started the smartphone business," the company said in a statement.
  

LG added the robust sales were attributable to the strong sales of its flagship smartphone, the G3, as well as the rising popularity of other low-end smartphones in the North American market.
  

Specifically, the company said its L and F smartphone lineups gained huge popularity around the globe. The models were replaced with the LG Magna, LG Spirit, LG Leon and LG Joy at end-March.
  

LG added it sold around 15.4 million units of smartphones around the globe in the first quarter, up 26 percent from a year earlier and the highest first-quarter figure since 2010.
  

Sales at its home appliances and air solution business, on the other hand, suffered a 2 percent on-year drop to reach 4.06 trillion won, while posting an operating profit of 229.3 billion won.
  

LG attributed the drop to the rising competition in the North American market coupled with unfavorable foreign exchange markets.
  

Its vehicle components business posted an operating loss of 2.4 billion won, as it expanded spending on research and development.
  

For the second quarter, LG said it will continue to tap deeper into the global smartphone market on the back of the G4 released on Wednesday.
  

The slightly curved G4 comes with a leather case and a camera whose performance is equal to that of a digital single-lens reflex devices, which compare to Samsung Electronics Co.'s Galaxy S6 and Apple Inc.'s iPhone 6.
  

"While establishing reputations as a premium brand in the advanced markets via flagships and smart watches, we will also expand sales of the low-end handsets with high-end features in the developing areas," the company said. "We will also add more tablet models to add to our profit."
  

The company also plans to step up marketing efforts on its Ultra HD and OLED TVs to improve the profitability of the home entertainment division, as the demand for TVs is expected to improve in North America and Asia over the second quarter.
  

LG also painted a rosy picture of the home appliances sector as sales of air conditioners and refrigerators are set to pick up on seasonal demand.
  

Shares of LG Electronics closed 0.33 higher at 61,200 won on the Seoul bourse Wednesday, while the benchmark KOSPI shed 0.23 percent. The earnings result was announced during trading hours. (Yonhap)