Proof of low power at’Post Corona’, Korea’s leading company Samsung and LG
Samsung Electronics’ 3Q quarterly operating profit
‘4Q record-high quarterly sales’ LG Electronics
Non-face-to-face, thanks to responding to the demand for Zipcock
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Two companies representing Korea, Samsung Electronics (005930)Wow LG Electronics (066570)Even in the midst of the novel coronavirus infection (Corona 19), last year, it proved its potential. In particular, Samsung Electronics’ sales of home appliances such as TVs increased due to the spread of non-face-to-face economy such as working from home and online games due to Corona 19, and the increase in the’Zipcock’ family, and operating profit reached 12 trillion won in the third and fourth quarters of last year. It also recorded unparalleled performance. LG Electronics also broke records of its record-high sales and operating profits on an annual basis last year. Annual operating profit also surpassed 3 trillion won for the first time since its inception. As the number of’Zipcock’ families increased due to Corona 19, the sales of premium household appliances and TVs, which LG Electronics has strong points, increased significantly.
According to the electronics industry on the 9th, Samsung Electronics recorded 61 trillion won in sales and 9 trillion won in operating profit in the fourth quarter of last year. This is an increase of 1.87% and 25.70%, respectively, compared to the same period of the previous year, and is evaluated as a result of prompt response to the increased demand for non-face-to-face and Zipcock. By business division, it is estimated that the semiconductor (DS) generated KRW 4.3 trillion, the IT and mobile (IM) KRW 2.3 trillion, and the home appliance (CE) KRW 1 trillion.
However, Samsung Electronics’ 4th and 4th quarter earnings slowed compared to the previous quarter when it recorded an’earning surprise’. Sales in the fourth quarter decreased by 8.9% compared to the previous quarter, and operating profit decreased by 27.1%. The reason for the brief slowdown in the fourth quarter is the strong won. At the end of the fourth quarter, the won-dollar exchange rate fell to 1,088 won, putting a burden on the semiconductor, which is the’performing player’. The decline in prices of its flagship DRAM and NAND flash is also a factor that drove down the last quarter’s operating profit. Display (DP), the flagship component, performed well despite difficult exchange rate conditions. In particular, it is known that the operating profit exceeded KRW 1 trillion even in the 4th and 4th quarters, which are usually off-demand, due to the influence of Apple, which delayed the launch of the iPhone 12 series, a strategic smartphone due to Corona 19.
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Sales similar to pre-corona, operating profit increased by 29%
Respond quickly to non-face-to-face and Zipcock demand… Stock Price “Previous Report Card”
It is an evaluation that last year’s annual performance was also greatly improved in Corona 19. Sales increased by 2.5% compared to the previous year, but operating profit increased by 29.4%. The product sold similarly to the previous year, but it made a relatively large profit. In the first half of last year alone, the impact of Corona 19 was great, but the demand that had been suppressed in the third and fourth quarters exploded, and demand for non-face-to-face and Zipcock surged, and the result was that the flagship semiconductors, smartphones, and home appliance businesses were evenly promoted. The semiconductor business has also enjoyed special benefits due to US sanctions by Huawei in China, and premium home appliances such as QLED TVs and Bespoke refrigerators also enjoyed popularity. It is estimated that Samsung Electronics’ TV sales volume last year was 49 million units, up from 2019 (43.07 million units).
In the securities industry as well, Samsung Electronics’ performance is popular as a “profitable report card”. Park Kang-ho, a researcher at Daishin Securities, said, “It is important to note that Samsung Electronics’ 4th and 4th quarter performances are not at a level of concern because they fell compared to the previous quarter, and that they showed improvement compared to before Corona 19.”
Above all, the earnings outlook for this year is quite bright as the semiconductor industry, which accounts for a large portion of operating profit, is rapidly improving. This is because the semiconductor industry, which accounts for a large portion of the performance, is expected to improve the market conditions for its flagship products such as DRAM and NAND flash, and to receive orders for foundry (consigned semiconductor production), which are rapidly increasing in demand around the world. Based on this, Samsung Electronics’ operating profit this year is estimated at 43 trillion won to 47 trillion won. KTB Investment & Securities predicted that Samsung Electronics achieved a record-high sales of 14 to 15 trillion won in the foundry sector last year, and is expected to increase to 20 trillion won this year. The system semiconductor division, such as Samsung Electronics’ mobile application processor (AP), such as the Exynos series, is also expected to continue to grow. Researcher Unho Kim said, “The first and fourth quarters of this year are the beginning of the upturn in the semiconductor economy,” and predicted that “the pace of improvement in the market conditions is rapidly progressing, especially around DRAM, and earnings improvement will continue from the bottom of the first and fourth quarters of this year.”
/ Reporter Sumin Lee [email protected]
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During the same period, LG Electronics recorded sales of KRW 18.78 trillion and operating profit of KRW 647 billion. Sales increased 16.9% over the same period last year, and operating profit increased 535.6%. Sales are the largest quarter ever. This is the first time that LG Electronics’ quarterly sales exceeded 18 trillion won. Operating profit was the highest in the 4th and 4th quarters. Last year, annual sales reached 63,263.8 billion won and operating profit reached 3.19 trillion won. Both sales and operating profit are the highest ever. Previously, the largest sales were 62.3 trillion won in 2019, and the operating profit was 2.7 trillion won in 2018. Last year’s sales increased 1.5% year-on-year and operating profit increased 31%. This is the first time that LG Electronics’ annual operating profit has exceeded 3 trillion won. Last year, the operating margin reached 5.04%, entering the 5% range for the first time.
Home appliances, first-class contributor to performance improvement… Over 2 trillion won in operating profit
Prove the potential by breaking the upper and lower performance flow chart
The top contributor to earnings improvement is the H&A division in charge of household appliances. The securities industry predicts that last year’s H&A division’s operating profit surpassed 2 trillion won for the first time. The annual operating margin of the household appliance business is also expected to have settled in the first two digits. It is analyzed that steam appliances such as stylers, dryers, dishwashers and other steam appliances, such as stylers, dryers, dishwashers, etc., played a strong role as the demand for household appliances increased as the time to stay at home increased due to Corona 19 last year. LG Household Appliances seems to be promising to become the number one in the global market last year, overtaking its rival Whirlpool in the US. The smartphone (MC) division continued to suffer losses in 4Q and 4Q, but the growth is estimated to have decreased. It is an analysis that the loss of new Apple products was reduced as sales of low-end products increased. This year, LG Electronics is pulling the trigger for the’form factor (device type)’ competition through a rollable phone in the form of a rolled up screen.
LG Electronics’ traditional performance flow chart of’Sanggo Haje’ is definitely broken this time. LG Electronics showed better performance in the first half of each year, and the second half of the year was sluggish due to increased marketing expenses at the end of the year. However, the operating profit in the second half of last year was 1.6 trillion won, exceeding the level of the first half (1.59 trillion won), surpassing 1 trillion won for the first time. In the second half of last year, as the proportion of online sales of home appliances and TVs increased due to the aftermath of Corona 19, marketing costs decreased and profitability improved.
LG Electronics’ earnings outlook for this year is also bright. Above all, the automobile electronic equipment (electrical equipment) and parts business, which has been LG Electronics”sick finger’, is expected to revive splendidly this year, leading to improved earnings. At the center of this is the LG Magna e-Powertrain, a joint venture for electric vehicle powertrain (power transmission system) that LG Electronics decided to establish with Magna of Canada at the end of last year with a total cost of KRW 1 trillion. The joint venture is likely to receive new orders from automakers in North America and Europe, which are Magna’s existing customers.
In the securities industry, LG Electronics’ new growth engine, automotive electronics and parts business, is expected to turn to the black in the third and fourth quarters of this year. Accordingly, it is predicted that LG Electronics’ operating profit this year will increase to the high end of 3 trillion won. / Reporter Lee Jae-yong and Oh Ji-hyun [email protected]
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