Top brokerages forecast on Tuesday that LG Electronics would likely post disappointing earnings in the third quarter this year, but saw room for improvement in the last quarter.

The market consensus for the firms’ revenue and operating profit was 14.5 trillion won ($13 billion) and 269 billion won, respectively, down 4.5 percent and 43.9 percent from the same period last year, according to a report released this week by FnGuide, a stock information provider.

Korea Investment and Securities Co. came up with one of the dimmest outlooks for the firm’s earnings Tuesday, forecasting that the world’s third-largest smartphone maker would record 13.1 trillion won in revenue and 178 billion won in operating profit.

Dongbu Securities chimed in on the lower-than-expected results, estimating third-quarter sales at 13 trillion won and operating income at 163 billion won.

The brokerage firms attributed the decline of LG’s operating profit to increased development and marketing costs for its flagship smartphone G2 and the heated competition in the handset market with Chinese rivals including ZTE and Huawei.

“Even though the G2 was unveiled in early August, earlier than the Galaxy Note 3 and the iPhone 5S, LG enjoyed little positive effect in sales since its release in the U.S. was delayed as the phone underwent some tweaks to meet the requirements of major U.S. mobile carriers,” an official close to the matter said.

The mobile business unit of the firm in the third quarter is expected to post growth of negative 2 percent to negative 0.2 percent, down from the positive 2 percent recorded in the second quarter, according to market analysts.

It is, however, expected that both revenue and operating profit will edge up in the fourth quarter mainly due to a sales boost for products including the Nexus 5 smartphone and the Vu 3 phablet.

Stock brokers projected LG’s fourth-quarter sales revenue and operating profit would stand at 15.6 trillion won and 295 billion won.

“Robust iPhone sales and fierce competition are some of the biggest concerns for LG, though,” said Kevin Lee from Korea Investment and Securities Co.

LG Electronics is scheduled to release its earnings report on Thursday.

By Kim Young-won (wone0102@heraldcorp.com)