Samsung and LG Electronics Reported by Shin Goga... What Is the Earnings Outlook for Q1 Next Year?

On the 9th, citizens are touring the Samsung Electronics booth at the '2020 Korea Electronics Show (KES)' held at COEX in Gangnam-gu, Seoul. Hosted by the Ministry of Trade, Industry and Energy and organized by the Korea Electronics and Telecommunications Industry Promotion Association (KFA), this event continues until the 12th. / Photo by Moon Honam munonam@

[Asia Economy Reporter Dongwoo Lee] Despite the impact of the novel coronavirus infection (COVID-19), Samsung Electronics and LG Electronics, which are continuously hitting record highs on the KOSPI, are drawing attention as to whether they will maintain strong performance next year.

According to FnGuide, a financial information specialist company, on the 26th, Samsung Electronics is expected to have sales of 58.4727 trillion KRW and operating profit of 8.6027 trillion KRW in the first quarter of next year, which would be increases of 5.6% and 33.4% respectively compared to the first quarter of this year.

Samsung Electronics recorded its highest-ever quarterly sales of 66.9642 trillion KRW in the third quarter of this year, with operating profit exceeding 10 trillion KRW. This is the best performance in seven quarters since the fourth quarter of 2018.

The industry expects Samsung Electronics to enter a full-fledged 'super cycle' (long-term boom) in the global DRAM market next year. Strong performance is also anticipated in the foundry (semiconductor contract manufacturing), image sensor, and other non-memory semiconductor (system semiconductor) businesses.

In particular, for DRAM, expectations for sales growth are increasing as 5th generation communication (5G) and smartphone shipments rise. Positive factors such as server replacements due to Intel's new central processing unit (CPU) launch have led to a consensus forecast of Samsung Electronics' sales reaching 260 trillion KRW next year.

▲An LG Electronics model is introducing the solar module 'NeON R' at the LG Electronics booth during the '2017 Energy Expo.' (Provided by LG Electronics)

LG Electronics is also expected to have sales of 15.8547 trillion KRW in the first quarter of next year, a 7.6% increase compared to the first quarter of this year. Operating profit for the same period is expected to be 1.0974 trillion KRW, similar to the first quarter of this year.

Analysis suggests that LG Electronics' sales increase will mainly come from improvements in the performance of the Vehicle Components (VS) business division. Orders and sales related to high-profit electric vehicle parts are steadily increasing.

Hyungwoo Park, senior researcher at Shinhan Investment Corp., analyzed, "Next year, VS sales are expected to reach 6.85 trillion KRW, a 23% increase compared to the previous year," adding, "Even this year, which struggled due to COVID-19, the order backlog is estimated at 60 trillion KRW, an increase of 7 trillion KRW compared to the previous year."

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