Samsung and LG Electronics Both Forecast Strong Q4 Performance

Samsung Leads Sales and Operating Profit Growth Driven by Semiconductors
LG Sees Continued Increase in Home Appliance Sales and Electric Vehicle Boosts

[Asia Economy Reporter Changhwan Lee] The fourth-quarter earnings announcements of major domestic electronics companies such as Samsung Electronics and LG Electronics are just a week away. The market expects these companies to record strong performances by expanding sales of key products such as semiconductors, home appliances, and smartphones despite the impact of the novel coronavirus disease (COVID-19) pandemic.

According to industry sources on the 30th, Samsung Electronics is scheduled to announce its fourth-quarter and annual results for this year around January 8 next year. The consensus estimate for the fourth-quarter earnings in the financial investment sector is KRW 61.9488 trillion in sales and KRW 9.8004 trillion in operating profit. Compared to the same period last year, sales are expected to increase by 3.5%, and operating profit by 37.0%.

The fourth-quarter results were also led by semiconductors. The expected sales for the Device Solutions (DS) division in the fourth quarter are KRW 18.4 trillion, with an operating profit of KRW 4.3 trillion, representing increases of 10% and 25%, respectively, compared to the previous year. The main factors include stable prices of memory semiconductors such as DRAM and NAND flash without significant declines and increased sales of system semiconductors in the fourth quarter.

The IT & Mobile (IM) division, responsible for the smartphone business, is expected to post an operating profit of around KRW 2.5 trillion, similar to last year. Despite a decline in sales due to the impact of COVID-19, the division is evaluated to have performed well through diversified sales strategies. The Consumer Electronics (CE) division is also estimated to record results similar to last year, supported by steady sales of major home appliances such as TVs, refrigerators, washing machines, and dishwashers.

LG Electronics’ Expectations Rise with Increased Home Appliance Sales

LG Electronics is also anticipating strong fourth-quarter results. The consensus estimate for the company’s fourth-quarter earnings is KRW 17.8603 trillion in sales and KRW 619.8 billion in operating profit. This represents an outstanding performance with sales increasing by 11.2% and operating profit soaring by 508.0% compared to the same period last year.

For LG Electronics, the increase in home appliance sales is driving overall performance improvement. Steam appliances such as dryers, washing machines, dishwashers, and stylers have gained significant popularity. Accordingly, the H&A division, which handles home appliances, is expected to record strong fourth-quarter results and is projected to rank first in the global home appliance market, according to both internal and external company sources. The TV division also expects improved results compared to last year, driven by strong sales of its flagship OLED TVs.

The market expects the growth trend in earnings for Samsung Electronics and LG Electronics to continue into next year. In particular, there is growing anticipation for Samsung Electronics as the memory semiconductor super cycle is expected to return for the first time in three years. With memory semiconductor supply tightening and spot prices rising in the fourth quarter, and the expansion of non-face-to-face (untact) demand for electronic devices expected next year, improvements in semiconductor business profits are anticipated.

Seungwoo Lee, a researcher at Eugene Investment & Securities, stated, "Next year, expectations for overcoming COVID-19 through vaccination and the recovery of global trade are rising, and the memory semiconductor cycle is expected to enter an upswing phase. A favorable business environment for Samsung Electronics will be created."

LG Electronics has high expectations for the expansion of its automotive components business. Recently, LG Electronics announced that it will establish a joint venture (JV) with Magna, the world’s third-largest automotive parts supplier, to actively target the electric vehicle market. An industry insider said, "LG Electronics will expand its competitiveness in electric vehicle parts through cooperation with Magna and secure major customers like Apple, significantly growing its automotive components business."

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