Samsung Electronics Achieves Annual Operating Profit of 36 Trillion KRW... Securities Firms Say "Fairly Better Than Expected"

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] Samsung Electronics announced on the 8th through its preliminary earnings report that it achieved consolidated sales of 236 trillion KRW and operating profit of 36 trillion KRW last year. The securities industry generally evaluated that the company posted solid overall performance despite the COVID-19 pandemic.

On this day, Samsung Electronics revealed that its preliminary consolidated operating profit for last year increased by 29.46% year-on-year to 35.95 trillion KRW. During the same period, sales totaled 236.26 trillion KRW, up 2.54% from the previous year. This marks the third highest record following 239.58 trillion KRW in 2017 and 243.77 trillion KRW in 2018.

Although the first half of last year was sluggish due to the impact of COVID-19, the surge in untact (contactless) and stay-at-home demand starting in the second half led to strong performance not only in the core semiconductor business but also in smartphones, TVs, and home appliances. Researcher Lee Jaeyoon of Yuanta Securities said, "Samsung Electronics appears to have recorded solid results despite the COVID-19 impact last year," adding, "The expansion of outsourced production for mid-to-low-end smartphones and efficient marketing expenditure helped defend profitability in the IT & Mobile (IM) division." He also analyzed that cost reduction in memory semiconductors, expansion of non-memory market share, and record-high operating profit achievement in the Consumer Electronics (CE) division contributed significantly.

For the fourth quarter, operating profit was 9 trillion KRW and sales were 61 trillion KRW, up 25.7% and 1.87% respectively compared to the same period last year. Compared to the previous quarter, sales decreased by 8.9% and operating profit by 27.13%. The decline in performance was driven by a 47% drop in operating profit in the IT & Mobile (IM) division, responsible for smartphones and 5G technology, which fell to 2.3 trillion KRW from the previous quarter. Researcher Lee explained, "The smartphone shipment volume, which reached 82 million units in the third quarter last year, dropped to about 60 million units in the fourth quarter, impacting the results."

The semiconductor and display divisions recorded operating profits of 4.2 trillion KRW and 1.4 trillion KRW respectively. Lee noted, "Despite unfavorable exchange rate conditions, shipments of memory semiconductors and flexible organic light-emitting diodes (Flexible OLED) exceeded initial expectations, resulting in solid performance."

Samsung Electronics is expected to see a significant increase in performance this year due to factors such as the semiconductor supercycle (long-term boom). According to the securities information provider FnGuide, the consensus (average forecast by securities firms) for Samsung Electronics is sales of 257.95 trillion KRW and operating profit of 46.75 trillion KRW. This represents a 9.2% increase in sales and a 30% increase in operating profit compared to last year.

Researcher Kim Yangjae of KTB Investment & Securities forecasted, "A turnaround in the memory market is expected in the first quarter of this year," adding, "While inventory levels in the set and memory industries have already normalized, demand in the front end is recovering, and considering that last year's capacity expansion was limited, memory supply and demand may be tighter than expected." He further added, "The memory market turnaround is expected to serve as momentum for a revaluation of industry valuations."

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