Some Brokerages Predict Earnings Shocks
As South Korea’s top three information technology (IT) companies, including Samsung Electronics Co., are about to release their earnings results for the fourth quarter of 2018, all eyes are on whether they would all deliver an “earnings shock.”
Market watchers said on Jan. 6 that Samsung Electronics will announce its earnings guidance for the fourth quarter of 2018 on Jan. 8, while SK Hynix will release its earnings report on Jan. 24.
Some market experts even expect that Samsung Electronics’ quarterly operating profit will fall below 13 trillion won (US$11.57 billion). They say that the company will see its figures decrease by more than 2 trillion won (US$1.78 billion) in the semiconductor sector alone from the 13.65 trillion won (US$12.14 billion) at the previous quarter.
SK Hynix posted a record operating profit in the third quarter at 6.47 trillion won (US$5.76 billion) but it is also forecast to show a decrease to some 5 trillion won (US$4.45 billion) in the fourth quarter.
When the forecasts are all realized, Samsung Electronics’ operating profit, which has shown a steady rise, will go down below the level of 14.07 trillion won (US$12.52 billion) it achieved in the second quarter of 2017, while SK Hynix will backpedal to the level before the second quarter of 2018 when its operating profit reached 5.57 trillion won (US$4.96 billion).
The situation is similar for LG Electronics. Forecasts released by securities companies until the end of last year estimated the company’s operating profit to stay at a level similar to the same period of last year when it earned 366.9 billion won (US$326.42 million). But some brokerages recently estimated its operating profit at some 200 billion won (US$177.94 million). This is largely due to a drop in sales of home appliances during the off-season and a continuous slowdown of the the company’s smartphone business.