This Time with Phones and Home Appliances... Samsung's Q1 Operating Profit Surprises at 9.3 Trillion Won (Comprehensive)

44% Increase from Last Year... Sales Reach 65 Trillion Won
Mobile Sector Drives Growth with Up to 4.5 Trillion Won

[Asia Economy Reporter Kim Heung-soon] Despite adverse conditions such as the prolonged COVID-19 pandemic and abnormal weather, Samsung Electronics posted an operating profit exceeding 9 trillion won in the first quarter of this year. Although its core semiconductor business underperformed expectations, strong sales of finished products (sets) such as smartphones, TVs, and home appliances offset this, resulting in an 'earnings surprise.' LG Electronics also recorded its highest quarterly performance since its founding, benefiting from a boom in premium TVs and home appliances.

Samsung Electronics announced on the 7th that its consolidated financial statements for January to March showed provisional sales of 65 trillion won and an operating profit of 9.3 trillion won. Sales increased by 17.48% compared to the first quarter of last year (55.33 trillion won) and by 5.61% compared to the previous quarter (61.55 trillion won). Operating profit rose 44.19% compared to the same period last year (6.45 trillion won) and increased 2.76% compared to the previous quarter (9.05 trillion won). Sales were close to the record high set in the third quarter of last year (66.96 trillion won), and operating profit exceeded the market consensus, which had forecast around 8.9 trillion won.

Revenge Spending on Premium TVs and Home Appliances Soars
Semiconductors Slump Due to Power Outage at US Factory

The driving force behind Samsung Electronics' strong first-quarter performance was the set division, including smartphones, TVs, and home appliances. Although the provisional results did not disclose performance by business segment, the industry estimates that the IT & Mobile (IM) division posted an operating profit of up to 4.5 trillion won, and the Consumer Electronics (CE) division earned around 1 trillion won, fueled by a 'pent-up' effect as consumer sentiment, suppressed by COVID-19, exploded.

Semiconductors, despite rising DRAM prices early in the year, were hampered by the impact of a cold wave in the US that forced the Austin plant in Texas to halt operations, resulting in an operating profit expected to be in the mid-3 trillion won range, down from the same period last year. However, with semiconductor prices expected to rise significantly from the second quarter, the outlook for semiconductor performance after Q2 is positive.

LG Electronics Records Highest Quarterly Performance Since Founding

Meanwhile, LG Electronics announced provisional results on the same day showing sales of 18.8057 trillion won and an operating profit of 1.5178 trillion won for the first quarter of this year. Sales increased by 27.7% and operating profit by 39.2% compared to the same period last year, both setting new quarterly records. This was driven by increased sales of premium products such as organic light-emitting diode (OLED) TVs in the global market and the popularity of hygiene-focused home appliances.

LG Electronics' smartphone business, which it decided to withdraw from in July, reportedly accumulated losses in the 5 trillion won range. However, expectations for annual performance improvement have grown as the automotive electronics division, positioned as a future business, is rapidly expanding.

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