Samsung·LG Electronics 1st Quarter Side-by-Stop Surprise Results… Expectations in the second quarter are getting bigger (2 reports in total)

Smartphone and home appliance sales increase due to prolonged coronavirus

Semiconductor prices are expected to increase from 2Q, reflecting the effect of LG mobile phone withdrawal

(Seoul = Yonhap News) Reporter Kim Young-shin = Samsung Electronics and LG Electronics recorded performances that exceeded market expectations in the first quarter of this year, with increased consumption of retaliation due to prolonged coronavirus infection (Corona 19).

Samsung Electronics made an operating profit of 9 trillion won by showing good performance in smartphones (mobiles) and TVs and home appliances instead of poor performance in the semiconductor division in the first quarter, and LG Electronics also recorded record-high earnings with home appliances and TVs leading the way.

As semiconductor prices rise and LG Electronics’ withdrawal of the mobile phone business are reflected from 2Q, expectations for earnings improvement are growing, and some point out that market uncertainties are expanding.

◇ Samsung Electronics’ operating profit of 9,3 trillion won… This time, smartphones and home appliances pull

According to the provisional results for the first quarter announced by Samsung Electronics on the 7th, sales and operating profit were KRW 65 trillion and operating profit were KRW 9.3 trillion, up 17.48% and 44.19% from the previous year, respectively. It recorded an earnings surprise that exceeded the original market forecast of 8 trillion won in operating profit.

The performance pattern by division is analyzed to be the opposite of last year. In the first half of last year, the semiconductor division’s performance was remarkable due to the impact of Corona 19, and the performance of the set division, such as smartphones and home appliances, was characterized by the’semiconductor effect’, which deteriorated.

However, in the first quarter of this year, the semiconductor division’s performance was relatively poor due to the shutdown of the Austin semiconductor plant due to the cold wave in Texas, and the industry analyzed that smartphones and home appliances led good performance by continuing the special prolonged period of Corona 19.

Samsung Electronics did not disclose the performance of each business division due to the announcement of the tentative results, but according to the securities industry, the operating profit of the semiconductor division (DS) was about 3.6 trillion won and the smartphone division (IM) was about 4.6 trillion won. Is estimated.

Eugene Investment & Securities[001200] Analyst Seung-Woo Lee analyzed that the operating disruption caused by the Texas power outage, the increase in initial cost burden from the start of operation of the DRAM 1z nano process and the start of operation of the 2nd factory in Xian NAND Flash in China had a negative impact on semiconductor performance.

In the case of the smartphone division, unlike before, sales of the Galaxy S21, the flagship model launched early in January, and the low-end Galaxy A series, were reported to have been good. The Galaxy S21 surpassed 1 million units in sales in 57 days of launch.

The consumer electronics (CE) division is also projected to have an operating profit of about KRW 1 trillion in 1Q thanks to the activity of customized consumer electronics’Bespoke’. In the industry, there is also an expectation that Samsung TV sales will increase by 15% from last year, centered on the premium lineup.

The industry believes that Samsung Display, the display (DP) division, has not significantly improved with operating profit of 400 billion to 600 billion won, and has maintained a similar scale to the previous forecast.

◇New record of LG Electronics’ performance… Achieved 1.5 trillion won in operating profit

LG Electronics’ sales in the first quarter were 18 trillion and 85.7 billion won, and operating profit was 1.57 trillion won, all record highs in the quarter. In particular, the operating profit was renewed in 12 years from the previous maximum of 1.2 trillion won in the second quarter of 2009.

LG Electronics’ record-breaking performance was driven by H&A. In the industry, LG Electronics household appliance operating profit in the first quarter is expected to exceed 8,000 to 900 billion won and sales of 6 trillion won for the first time ever.

The first quarter operating profit of the HE business division in charge of TV is expected to reach 350 billion won and sales of around 3.6 trillion won. HE Headquarters seems to have increased sales by more than 30% from the previous year on the back of increased sales of premium products such as OLED TVs.

Market research firm Omdia forecasts LG Electronics OLED TV shipments in the first quarter to 759,000 units, more than twice that of the same period last year.

The mobile division in charge of handsets (MC) is estimated to have posted an operating loss of 200 billion won in 1Q. LG Electronics’ MC business headquarters posted a deficit of 840 billion won last year, and the accumulated deficit over the past five years amounted to 4.6 trillion won.

It is expected that the BS business headquarters in charge of business-to-business transactions recorded an operating profit of about 21 billion won, and the electrical equipment business headquarters (VS) recorded an operating loss of about 6 billion won.

It is reported that the electronic equipment business narrowed its deficit in response to the recovery of demand from automakers, and the BS business saw its sales increased in line with non-face-to-face trends and seasonal demand in the first quarter.

◇ Samsung’s operating profit forecast of 10 trillion won on semiconductor recovery in 2Q… LG Electronics Withdraws Cell Phones

Samsung Electronics’ semiconductor division hit a bottom in the first quarter of this year and is predicting an improvement again in the second quarter. Amid the bad news of the plant shutdown, the strong semiconductor prices are expected to be reflected in earnest from 2Q. It is possible that the Texas government’s loss compensation for power outages will be reflected in the second quarter.

On the other hand, smartphones, which were the leading players in the first quarter, are expected to show’lower and lower’ performance in the aftermath of production disruptions due to shortage of semiconductor supply and rising cost and marketing costs.

According to the securities industry, the semiconductor division’s operating profit is expected to recover to around 5 trillion won in 2Q, and the IM division is expected to fall below 3 trillion won. There are many forecasts that Samsung Electronics’ company-wide operating profit will exceed 10 trillion won thanks to the semiconductor recovery in 2Q.

Song Myung-seop, a researcher at Hi Investment & Securities, said, “In the second quarter, shipments of the Galaxy S21, which were released early, will inevitably decrease due to a sharp decline in profits, but profits in the semiconductor division will surge and one-off profits will occur in the system LSI and display divisions.” It is expected to increase by more than 10% from the quarter.

With the semiconductor boom driven by COVID-19 non-face-to-face demand, the expectation that Samsung Electronics’ annual operating profit will reach 50 trillion won is also rising. However, there are concerns that Vice Chairman Lee Jae-yong, the current head of the country, is in jail and the uncertainty arising from the US-China hegemony struggle is growing.

LG Electronics is also expected to see the effect of withdrawing the mobile phone business, which has been a “sick finger” for a long time, from 2Q. It is predicted that the electrical equipment business, which LG Electronics has identified as a new business in the future, will turn to a profit in the second half of the year after further reducing its deficit in the second quarter. In July, LG Magna E-Powertrain (tentative name), a joint venture established with Magna, is about to be launched.

It is expected that the annual operating profit will reach up to 4 trillion won by reinforcing the business folio with home appliances and electronic devices and rearranging the mobile phone business.

Kim Ji-san, a researcher at Kiwoom Securities, said, “The strong demand for home economy centered on home appliances and TVs is expected, and improvement is expected to be centered on electronics.” “Home appliances and TVs overcome the rise in raw material prices such as semiconductors by improving product mix and rising average selling price (ASP). I can do it.”

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2021/04/07 16:30 sent