LG Electronics, the world's No. 3 handset behind Nokia and Samsung, reported a smaller-than-expected 25 percent fall in first-quarter profit and said it expected improving sales of mobile phones to drive a recovery in the quarters ahead.
The Korea-based company said it sold 22.6 million handsets in the first three months this year, down from 25.7 million units sold -- but said its handset margins held up well.
LG also said it will strive to increase handset sales by more than 10 percent in the second quarter from the first.
"We think the second quarter could yield better results than the first," said Chief Financial Officer Jung Do-hyun. "Considering economic indicators, it's unlikely that the economy would recover sharply. The downturn could drag on as long as two years, or as short as one year."
LG posted a 6.7 percent profit margin in mobile phones, an increase from 5.2 percent reported in the fourth quarter.
Last week, Nokia reported a 90 percent drop in January-March profits and its first-ever quarterly pretax loss. The Finnish company repeated its forecast for market volumes to decline around 10 percent in 2009.
Fourth-ranked Sony Ericsson also reported heavy losses on its handset operations in the fourth quarter of last year.