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SEOUL—LG Electronics Inc. reported a surge in first-quarter profit on record margins at its television business, but the South Korean company is pinning its hopes on its struggling mobile business to fuel further growth.

While a supply glut has driven down the price of liquid-crystal displays used in televisions—and helped boost the company's net profit for the first three months to 198 billion won ($172 million) from 38 billion won a year earlier—the electronics maker warned that the trend was unlikely to continue for the rest of the year.

Instead, LG executives are banking on a turnaround at the company's mobile business after three straight quarters of operating losses, spurred by sales of its new G5 smartphone.

LG introduced the G5 phone, which comes with a modular body that allows users to easily swap in accessories, to a warm reception in February, fueling expectations the new smartphone will be a hit.

LG expects to ship three million units of the G5 in the second quarter. Executives say the phone is on track to outpace the G3 model, released two years ago, which has been one of the company's best-sellers. LG has shipped 1.6 million units of the G5, compared with 900,000 units during the first month of the G3's release.

But the new phone comes at one of the toughest times in the smartphone market, which is facing waning global demand. Total smartphone shipments fell 3% to 335 million units in the first quarter from a year ago, which was the first ever decline in shipments since the advent of smartphones, research firm Strategy Analytics said Thursday.

"There's no promise the [strong] profits will stay where they are given the dent in overall demand and stiff competition," Greg Roh, an analyst with HMC Investment Securities in Seoul, said in a recent note to clients.

LG's mobile business has been hammered by competition from heavyweights like Apple Inc. and Samsung Electronics Co., and low-cost Chinese brands. The unit logged an operating loss of 202.2 billion won, compared with an operating profit of 56.8 billion won a year earlier.

The TV business swung to a 335.2 billion won operating profit from a loss of 6.2 billion won a year earlier, as margins rose to 7.7%. A renewed push to sell more premium products, including TV models that sport next-generation display technology, also helped, executives said.

Those gains, however, came in part at the expense of a slump in earnings for LG Display Co., an affiliate company that makes screens for LG's TV products. LG Display said earlier this week it eked out a net profit of 1.2 billion won, as falling screen prices wiped out most of the 475.8 billion won profit it reported a year earlier.

LG's total operating profit for the March quarter rose 66% to 505 billion won, the highest in nearly two years.

Write to Min-Jeong Lee at min-jeong.lee@wsj.com

(END) Dow Jones Newswires

April 28, 2016 07:45 ET (11:45 GMT)

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