Even the Mayor Was Surprised by SK Hynix's Earnings
Operating Profit in Q1 Rises 239% Quarter-on-Quarter
Thanks to Increased Demand for Server Semiconductors Despite COVID-19 Challenges
[Asia Economy Reporter Dongwoo Lee] SK Hynix posted operating results in the first quarter that significantly exceeded market expectations despite changes in the external environment caused by the novel coronavirus disease (COVID-19).
SK Hynix announced on the 23rd that it recorded sales of 7.1989 trillion KRW and operating profit of 800.3 billion KRW in the first quarter on a consolidated financial statement basis.
Sales increased by 6.3% compared to the first quarter of 2019 (6.7727 trillion KRW) and by 3.9% compared to the previous quarter (6.9271 trillion KRW). Operating profit decreased by 41.4% compared to the same period last year (1.3665 trillion KRW) but surged by 239% compared to the previous quarter (236 billion KRW).
This is a surprise performance that surpassed the average securities market forecast of sales of 6.868 trillion KRW and operating profit of 509.1 billion KRW. The operating profit margin in the first quarter also recorded the highest level since the first quarter of last year (20.18%) at 11.1%.
SK Hynix explained that these results were due to no production disruptions in the semiconductor sector despite the COVID-19 situation, increased sales of server products driven by the boom in non-face-to-face markets such as video conferencing and online classes, and improvements in yield.
SK Hynix views the situation as serious from the second quarter onward. The company expressed concern, stating, "The outlook for the global memory market is uncertain to an extent rarely seen in previous cases." They explained that if the impact of COVID-19 prolongs, production activities could shrink due to increased demand volatility.
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Jinseok Cha, Chief Financial Officer (CFO) of SK Hynix, said, "We are doing our utmost to minimize risks caused by COVID-19 and to be fully prepared with technological innovation and infrastructure so that we can respond promptly when growth momentum centered on 5G and servers arrives."
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