Samsung Electronics Co. is expected to post more than 14.6 trillion won (US$13.73 billion) in the first quarter of this year. The figure is slightly lower than 15.15 trillion won (US$14.25 billion) in the fourth quarter of last year but nearly 50 percent higher than 9.9 trillion won (US$9.31 billion) in the first quarter of last year.
According to market tracker WISEfn on April 1, there is a general consensus among securities companies that Samsung Electronics will record 61.44 trillion won (US$57.8 billion) of sales and 14.68 trillion won (US$13.81 billion) of operating profits in the first quarter.
Just a month ago, many of them had a negative outlook for Samsung Electronics’ earnings. This is because the first quarter is usually a slow season for the home appliance and information technology (IT) industries, and the Korean won is getting stronger against the dollar which will adversely affect exports. In particular, there were concerns over the business showings in the display sector.
Song Myung Sup, an analyst at HI Investment & Securities Co., said, “Samsung Electronics is forecast to see its operating profits for the active matrix organic light emitting diodes (AMOLED) display unit dramatically shrink due to stock-outs from sluggish sales of the iPhone X and a slowdown in the smartphone market. There is also a possibility that the company’s medium and large-sized liquid crystal display (LCD) unit will post a slight operating loss as the price of LCDs continues to fall.”
In fact, Samsung Electronics’ average earnings outlook a month ago were 61.07 trillion won (US$57.45 billion) of sales and 14.6 trillion won (US$13.73 billion) of operating profits, lower than the figures now. As the day of earnings announcement approached, an increasing number of securities firms are raising their earnings estimates for Samsung Electronics.
Kim Rok-ho, an analyst at Hana Financial Investment Co., said, “Samsung Electronics’ operating rate in the display sector will decrease because the sales of new models of North American customer firms will be lower than expected. Accordingly, the company’s operating profits will plunge 0.2 trillion won (US$188.15 million) from 1.4 trillion won (US$1.32 billion) of the previous quarter. For DRAM, shipments will drop compared to the previous quarter as the company has been working on a project to switch the Line 11 DRAM plant in the complex into an image sensor line. However, profitability will improve with a higher price of DRAMs. The IT and Mobile (IM) division is expected to see both shipments and prices rise from the previous quarter owing to the release of the Galaxy S9, boosting operating profits of Samsung Electronics as a whole.”