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Moody's Forecasts a 50% Drop in Samsung Electronics' Operating Profit in 2019
Moody's Sees Semiconductor Demand Gradually Expanding.
Moody's Forecasts a 50% Drop in Samsung Electronics' Operating Profit in 2019
  • By Kim Eun-jin
  • May 3, 2019, 09:57
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Moody’s Investors Service has forecast Samsung Electronics Co.’s annual sales and operating profit before adjustment will decrease by 10 percent and 50 percent, respectively, this year.

Moody’s Investors Service, one of the largest global credit rating agencies, said on May 2 that Samsung Electronics Co.’s annual sales and operating profit before adjustment will decrease by 10 percent and 50 percent, respectively, this year compared to last year when it posted its best-ever performance.

The forecast seems to be based on the fact that the semiconductor market conditions are still unclear, though demand of memory chips is expected to be on the rise in the second half of the year. However, Moody’s said it is positive that demand for semiconductors, especially high capacity products, is gradually expanding.

Moody’s said, “Samsung Electronics’ poor performance in the first quarter of this year is negative to its credit rating but it has no immediate effect on the credit rating. The company’s weak Q1 performance reflects cyclicality in its business lines, but Samsung Electronics has maintained very strong financial buffers that should help it operate through this downturn.”

It also added, “We expect memory chip demand to improve in the second half of this year as datacenter customers finish destocking, seasonality turns more favorable compared with the first half, and lower memory chip prices encourage more applications and stimulate demand. Samsung Electronics is expected to show the improvement in performancein the second half based on a seasonal demand expansion of flexible smartphone OLEDs, with the company maintaining its strategy based on high value added products such as UHD, 8K, ultra large TV panel.”


Previously, Samsung Electronics’ Q1 sales and operating profit before adjustment fell by 14 percent and 60 percent, respectively, from a year earlier due to poor performance in the memory semiconductor sector. Its profit showed a sharp decline in profit as bothdemand and price of memory chips dropped.