Tuesday, November 19, 2019
SK Hynix Posts Negative Earnings Surprise
Investment to Be Cut by 40% from 2018
SK Hynix Posts Negative Earnings Surprise
  • By Kim Eun-jin
  • January 25, 2019, 09:04
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SK Hynix has delivered an earnings shock as its sales and operating profit for the fourth quarter of 2018 fell 13 percent and 32 percent from the previous quarter, respectively.

SK Hynix announced on Jan. 24 that its sales and operating profit for the fourth quarter of 2018 are 9.94 trillion won and 4.43 trillion won, down 13 percent and 32 percent from the previous quarter, respectively. Earlier, local securities companies estimated the quarterly operating profit at 5.09 trillion won.

The quarterly operating profit of SK Hynix dipped below 5 trillion won for the first time since Q1, 2018. This has to do with a decline in memory chip demand and a decrease in memory chip price. In addition, the company gave an all-time high bonus amounting to 1,700 percent of its employees’ base pay.

DRAM shipments fell 2 percent and the average selling price of DRAM chips fell 11 percent quarter on quarter in Q4, 2018. The average selling price of NAND flash memories dropped 21 percent although NAND flash shipments rose 10 percent. The shipments and prices were affected by an increase in the inventory of the products for data centers and a decline in smartphone demand.
 

SK Hynix is estimating this year’s DRAM and NAND flash demand growths at less than 20 percent and mid-30 percent, respectively. For reference, the figures were over 20 percent and over 40 percent last year. The company explained that it is aiming at a DRAM shipment growth of at least mid-10 percent and a NAND flash shipment growth of slightly less than 40 percent in view of the estimates.
 

SK Hynix showed its confidence in long-term growth. In fact, the company showed the best business performance in history last year despite the worse-than-expected Q4 performance. Specifically, its annual sales and operating profit totaled 40.45 trillion won and 20.84 trillion won each in 2018, reaching all-time highs for the second consecutive year. It said that investments for long-term growth will continue without reduction.
 

Still, the company is planning to curtail its short-term semiconductor investment. Its investment for this year is estimated at 10 trillion won. The amount hit a record high of 17 trillion won last year.