Samsung Group Approaches 400 Trillion KRW Revenue Era... Focus on Whether Electronics Operating Profit Exceeds 60 Trillion KRW

"60 trillion, Operating Profit Margin Must Be 19~20% to Achieve"

[Asia Economy Reporter Moon Chaeseok] There is a forecast that Samsung Group's total sales will exceed 400 trillion won this year. However, it is analyzed that whether Samsung Electronics will surpass an annual operating profit of 60 trillion won remains to be seen.

On the 25th, Korea CXO Research Institute, a corporate analysis specialist organization, announced the results of the '2022 Samsung Group and Samsung Electronics Sales Forecast Analysis.'

This year, Samsung Electronics' consolidated sales are expected to reach between 304 trillion and 323 trillion won. The first time consolidated sales entered the 200 trillion won range was in 2012. From 2012 to 2020, sales were in the low 200 trillion won range, and last year recorded 279 trillion won.

The average proportion of first-half sales from 2010 to 2021 was between 46.2% and 49.9%. Even if the first-half sales proportion this year is estimated at 48% to 51% of annual sales, it is expected that annual sales will easily exceed 300 trillion won.

Traditionally, consolidated sales in the third and fourth quarters were higher. To exceed annual sales of 300 trillion won, the CXO Research Institute expects that sales of over 80 trillion won each in the third and fourth quarters are sufficient. If the cumulative sales for the third quarter, to be announced in November, reach about 230 trillion won, entering the 300 trillion won club is considered achievable.

Expanding the scope to the group level, it is expected that this year will record 410 trillion won, making it highly likely to join the 400 trillion won club. Samsung Group first joined the 300 trillion won club in 2012, recording 312 trillion won at that time. It recorded 330 trillion won in 2020 and 378 trillion won last year.

How about this year's performance? The cumulative first-half sales of 16 major affiliates, which account for 95% of the group's sales, increased by more than 35 trillion won compared to the same period last year. The CXO Research Institute predicted that even if the sales scale in the second half is maintained at last year's level, it will not be difficult for the group's total sales to exceed 400 trillion won.

However, it is pointed out as regrettable that Samsung Electronics' operating profit margin is still in the 10% range. It is advised that it should be raised to the 20% range. From 2010 to last year, Samsung Electronics' consolidated average operating profit margin was 15.7%. Except for the semiconductor 'super cycle' years of 2017 (22.4%) and 2018 (24.2%), it was not easy to exceed the 20% range.

At its lowest, it dropped to 8.8%. The proportion of first-half operating profit to annual operating profit also fluctuated widely between 40.5% and 62.6%. This year's first-half operating profit margin is 18.2%, which is 7.4 percentage points lower than 25.6% in 2018.

As a result, even if Samsung Electronics' consolidated sales increase to around 320 trillion won this year, the operating profit may be less than that of 2018.

For the consolidated operating profit to exceed 60 trillion won for the first time this year, the annual operating profit margin must be at least 19% to 20%. The CXO Research Institute expects Samsung Electronics' annual operating profit this year to be between 51 trillion and 62 trillion won.

Oh Ilseon, head of the CXO Research Institute, emphasized, "For Samsung, which will celebrate its 100th anniversary 16 years from now, this year is likely to be a turning point with significant changes in the sales landscape," adding, "It is necessary to identify various factors such as population decline, climate crisis, and rapidly changing consumption patterns, and to discover many new products and businesses with high added value."

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