LG Electronics announced another profitable quarter for its handset business, although its revenue shrank due to declines in demand for its feature phones.

Device shipment volumes fell by 22 percent compared to the prior sequential quarter, to stand at 13.7 million units.

The company announced an operating profit of KRW35 billion (US$30 million) from its handset business, compared to a prior-year loss of KRW101 billion, on sales of KRW2.5 trillion, down 14 percent from KRW2.9 trillion.

Following a return to profit in the last quarter of 2011 after a long period of losses, the company stayed in the black, due to “better product mix with increased smartphone portion, mainly from LTE phones, and better cost structure from improved efficiency in phones.”

Looking forward, the company is planning to expand its LTE line-up for developed markets, launch its first quad-core smartphone, and introduce its “design-centric” L-Style range of 3G devices.

For the mobile handset sector as a whole, while total demand is not expected to grow fast, LG does anticipate “continuous growth for the smartphone market,” especially for LTE phones in countries where such networks are commercialised.

On a group level, LG has also returned to profit after two loss-making quarters, reporting net profit of KRW243 million, compared to a prior-year loss of KRW16 million, on sales of KRW12.2 trillion, down from KRW13.2 trillion.

It said that this was “a direct result of the company’s efforts to innovate in all key business units and focus on high-performing products.” It said the Home Entertainment business posted a “significantly improved operating profit in the quarter,” although sales suffered due to a “sluggish European economy.”