LG Electronics reported a poor performance for its Mobile Communications division in the first quarter of 2016, ahead of the launch of its new flagship smartphone.

The South Korean firm reported an operating loss of KRW202.2 billion ($177.23 million) in the quarter, compared with a prior-year profit of KRW56.8 billion, on revenue of KRW2.96 trillion, down 15.5 per cent.

It shipped 13.5 million units during the period, down 12 per cent. This was attributed to seasonality, as well as a drop in the volume of flagship products ahead of the introduction of its new G5 flagship.

LG said that among the issues it faced was operators in North America reducing channel inventory, as well as mid-tier weakness in Latin America and CIS due to “unstable economic conditions”.

Profitability was also impacted by advance marketing of G5.

LG also warned that competition in the smartphone market will continue to increase, leading to further pricing pressure. It intends to counter this with a “strong push” for G5, as well as new mass tier models such as its X series.

On a group level, the picture was more rosy, with its Home Appliance & Air Solution and Home Entertainment units both seeing “significant” profit increases.

First quarter group net profit of KRW198.1 billion was up from KRW38.4 billion, on revenue which dipped 4.5 per cent to KRW13.62 trillion.