LG Electronics Inc posted a 25 percent fall in quarterly operating profit on Tuesday, hurt by the global recession, but results beat expectations on resilient handset margins and improvements in its flat screen TV business.

The world's No. 3 mobile phone maker said it expected to increase total sales by more than 10 percent in the second quarter from the first, thanks to strong revenues from air conditioners. It also said it aimed to increase mobile phone sales by more than 10 percent in the second quarter from the first.

LG's <066570.KS> improving brand image and price competitiveness from the weaker won are helping the South Korean company expand market share in mobile phones and LCD TVs at the expense of struggling foreign rivals, even in the midst of the downturn.

LG posted a 455.6 billion won ($337.1 million) global-basis operating profit for the quarter to March 31, beating a 307.4 billion won average profit forecast from nine analysts polled by Reuters.

That compared to a 605.2 billion won profit for the same quarter a year earlier but improved from a 101.4 billion won operating profit in the fourth quarter last year.

It posted a 197.6 billion won net loss in the first quarter, narrower than a 671.3 billion won net loss in the previous quarter when it was hit by sharp losses at its flat-screen joint venture, LG Display Co Ltd <034220.KS>.

Its global-basis sales were 12.85 trillion won, in line with forecasts.

LG, which trails Nokia and Samsung Electronics <005930.KS> in mobile phones, sold 22.6 million handsets in the first quarter, down from 25.7 million units sold in October-December.

Last week, Nokia reported a 27 percent fall in January-March sales and its first-ever quarterly loss while repeating its forecast for market volumes to decline around 10 percent in 2009.

In popular liquid crystal display (LCD) TVs, LG competes with home rival Samsung and Japan's Sony <6758.T>.

LG Electronics shares were up about 1 percent as of 0525 GMT, against the wider market's <.KS11> 0.4 percent loss. The stock has risen 40 percent so far this year through Monday's close, leading the broader market's <.KS11> 19 percent gain.

($1=1351.4 Won)

(Reporting by Rhee So-eui and Marie-France Han; Editing by Jonathan Hopfner and Muralikumar Anantharaman)