'Q3 Boom' Samsung and LG... TV and Home Appliance Performance Expected to Remain Strong in Q4

[Asia Economy Reporter Ki-min Lee] Samsung Electronics and LG Electronics' TV and home appliance divisions are expected to have achieved blockbuster results in the third quarter of this year, and are projected to continue their strong performance in the fourth quarter compared to last year.

On the 8th, Samsung Electronics and LG Electronics announced their preliminary third-quarter earnings for this year, reporting operating profits of 12.3 trillion KRW and 959 billion KRW, respectively. For Samsung Electronics, this marks a breakthrough of 10 trillion KRW after two years, and for LG Electronics, it is the highest third-quarter figure ever recorded. One of the factors behind the earnings surprise for both companies is the increase in home appliance sales. Samsung Electronics' Consumer Electronics (CE) division recovered an operating profit of 1 trillion KRW in the third quarter, the highest since the second quarter of 2016, and LG Electronics' Home Appliance & Air Solution (H&A) division and TV (HE) division are estimated to have exceeded a combined operating profit of 800 billion KRW. This surge is attributed to pent-up demand caused by the COVID-19 pandemic and the 'stay-at-home' trend, which led to a sharp increase in sales of hygiene and premium home appliances. Additionally, reduced marketing expenses contributed to improved profitability, which also influenced the rise in operating profits.

Despite the traditional decline in demand for white goods in the fourth quarter, the increase in TV demand is expected to sustain better performance compared to the previous year. Accordingly, industry analysts predict that the operating profits of the TV and home appliance divisions of both companies will increase in the fourth quarter of this year compared to the fourth quarter of last year.

In particular, TV demand is expected to be even more prominent in the fourth quarter of this year. Taiwanese market research firm TrendForce forecasted that TV shipments in the third quarter of this year reached an all-time high and will increase further in the fourth quarter. Samsung Electronics and LG Electronics' third-quarter TV shipments increased by 67.1% and 81.7%, respectively. An industry insider commented, "Demand for white goods, which was suppressed in the first and second quarters due to COVID-19, increased in the third quarter, and this trend is expected to continue in the fourth quarter, supported by rising TV demand, making it highly likely that good results will be achieved in the fourth quarter compared to last year." Song Myung-seop, a researcher at Hi Investment & Securities, also said, "TV shipments are expected to increase during the peak season of the year," adding, "Especially due to COVID-19, as people spend more time at home, TV demand appears to be increasing."

With the increase in untact (contactless) sales due to COVID-19, marketing expenses are decreasing, which is expected to improve profitability. A home appliance industry official stated, "It is true that marketing expenses are decreasing as untact demand increases." Park Hyung-woo, a researcher at Shinhan Financial Investment, recently noted in an LG Electronics report, "Proactive inventory management and reduced competition intensity within the set industry may prevent a significant increase in year-end marketing expenses, which have been highlighted annually," and forecasted, "Although fourth-quarter earnings will decline compared to the third quarter, they will improve significantly compared to the same period in previous years."

This content was produced with the assistance of AI translation services.