Samsung·LG Electronics,’savory fun’ in the fourth quarter of last year…

It is estimated that Samsung Electronics and LG Electronics had a great fun in the fourth quarter of last year. This is thanks to the rapid increase in demand for semiconductors, premium new home appliances, and smartphones as the untouched (non-face-to-face) work environment and the Zipcock (daily life only at home) culture increased due to Corona 19.

According to related industries on the 4th, Samsung Electronics and LG Electronics are about to announce their provisional results for the fourth quarter of last year on the 8th. In the financial investment and securities industries, both companies are expected to have achieved significant performance unless there are any surprises. However, it is analyzed that the rise in operating profit would have slowed compared to the previous 3Q, when the’earning surprise’ was recorded.

Samsung Electronics LG Electronics CI [사진=아주경제DB]

The securities industry estimates Samsung Electronics’ fourth quarter earnings consensus (market estimate) at 61,894.9 billion won in sales and 9.74 trillion won in operating profit. This is an increase in sales by 3.3% and operating profit by 36% compared to the same period last year.

The good performance was also driven by semiconductors. The device solution (DS) division’s expected operating profit is estimated to have risen 25% year-on-year to KRW4.3 trillion. In 4Q, the price of memory semiconductors such as DRAM and NAND flash remained unchanged, and system semiconductor sales increased. The CE division is also expected to maintain a similar level to last year as sales of major home appliances such as TVs, refrigerators, washing machines, and dishwashers are solid.

However, the profitability is expected to decline slightly compared to the previous 3Q when the IT and mobile (IM) division, which is in charge of smartphones, recorded an earnings surprise as it showed a slight weakness.

LG Electronics is also expected to see substantial earnings in 4Q. Stock price forecast sales are 17,8603 billion won and operating profit is 6198 billion won. Although it was slightly lower than in the previous 3Q, sales and operating profit increased by 11.2% and 508.0%, respectively, compared to the same period of the previous year (sales of 16.612 billion won and operating profit of 101.8 billion won).

LG Electronics’ overall earnings were driven by strong sales of premium new home appliances such as clothing managers (stylers), dryers, and steam cleaners, which are growing in demand despite the continued mobile division’s deficit.

In particular, it is predicted that the H&A (Home Appliance & Air Solution) business division in charge of household appliances will record the highest operating margin in the fourth quarter of all time, to record the No. 1 market share in the household appliance market. The TV division is also expected to improve its earnings compared to the same period last year thanks to strong sales of its flagship organic light-emitting diode (OLED) TV.

The industry observes that the strong 4Q results of both companies will continue into the new year. In particular, Samsung Electronics is receiving support from the prospect that the memory semiconductor super cycle will come back in three years. Although vaccination is in full swing, the reason is that the demand for advanced electronic devices will increase this year due to the aftershock of Corona 19.

Accordingly, Samsung Electronics is expected to strive to increase foundry production in the semiconductor sector. The increase in the volume of mobile APs (application processors) driven by the increase in 5G mobile communication (5G) devices, and in-house chipset manufacturing by set makers such as Apple are good news.

LG Electronics is expected to benefit from the growth of premium new home appliances and OLED TV sales. Expectations for the expansion of the electronics business are also high. LG Electronics recently announced that it will set up a joint venture (JV) in the powertrain sector with Magna International, the world’s third-largest auto parts maker, to target the electric vehicle market.

An industry insider said, “Samsung Electronics will take a step further on the rise of the memory semiconductor cycle, and LG Electronics is paying attention to whether or not to expand its electronic equipment business through cooperation with Magna.”