Samsung Electronics and LG Electronics, which are ahead of ‘CES 2022’, the biggest event of the year, are expected to show record-high performance through earnings announcements this week. It is thanks to the strong support of pent-up (suppressed) demand despite the COVID-19 situation that has been going on for two years. Expectations for this year’s earnings are growing as it overcomes concerns regarding rising raw material prices and logistics issues.
According to related industries on the 3rd, Samsung Electronics and LG Electronics will announce their interim results for the fourth quarter of last year and the year on the 7th. In the financial investment industry, Samsung Electronics and LG Electronics are showing expectations that they will announce record-breaking earnings despite the ongoing Corona crisis last year.
Samsung Electronics’ sales in the fourth quarter of last year are expected by the market to reach 75.3 trillion won. In the third quarter of last year, the previous quarter, sales of nearly 74 trillion won already set a new record, which is likely to have been changed in the fourth quarter. Operating profit is expected to slightly exceed KRW 15 trillion, a slight decrease from the previous quarter, but an increase of nearly 70% compared to the same period last year.
It is still the semiconductor (DS) sector that led Samsung Electronics’ performance last year. In the fourth quarter of last year, DS alone is believed to have recorded an operating profit of KRW 9 trillion. The DRAM business was able to stabilize due to the DRAM price drop, which was not as big as the market expected, and global IT companies’ investment in server DRAM continued. Sales are expected to be in the mid-to-late range of KRW 20 trillion.
It is analyzed that the mobile business was able to achieve good results thanks to strong sales of foldable phones. The market is expected to record operating profit of KRW 3 trillion and sales of KRW 20 trillion in the last quarter. It is expected that the ‘Galaxy Z Flip 3’ and ‘Galaxy Z Fold 3’, released in the second half of the year, had a positive impact on earnings as they were sold in earnest in the fourth quarter. Samsung Electronics also revealed that sales of the Galaxy Z series, including the Galaxy Z Flip 3, have more than quadrupled compared to last year.
Even on an annual basis, it is predicted that the record high performance will be achieved. Sales are expected to reach 278 trillion won and operating profit to exceed 52 trillion won. Considering that sales were close to 244 trillion won during the semiconductor super boom in 2018, it is the first time in three years to write a new sales record. The operating profit is also slightly lower than when it approached 59 trillion won three years ago, but it is estimated that the performance will be comparable to this.
▲ Panoramic view of CES event ⓒNew Daily DB
LG Electronics is also expected to set an all-time high as a result of strong performance every quarter due to steady demand for home appliance pent-ups last year. In the fourth quarter of last year, sales grew to close to 20 trillion won and operating profit lightly exceeded 800 billion won, which is highly likely to break the record in the third quarter of last year.
It is analyzed that it is medicine for LG Electronics that expensive premium home appliances are being sold as if they have spread wings due to Corona 19. LG Electronics’ premium OLED TVs and customized home appliance object collection series are gaining popularity not only in Korea but also in overseas markets such as North America, now solidifying their clear ‘home appliance No. 1’ position.
Thanks to this, even on an annual basis, the operating profit reached 4 trillion won for the first time in history. Sales are also expected to reach a record high of 73 trillion won. Whirlpool, which had been competing for the top spot in home appliances, raised its sales in the fourth quarter thanks to events such as Black Friday and Boxing Day at the end of the year. Predictions of renunciation of the throne are gaining strength.
Samsung Electronics and LG Electronics seem to be building a solid foundation for growth as they have been through the COVID-19 situation for over two years, which was expected to have a lot of variables and difficult earnings. As the two major mountain ranges, a domestic electronics company, are showing strong strength in the crisis, it seems that expectations for this year’s performance will not go away despite the recent spread of the Omicron mutant virus.
