Inventory Assets Increase by KRW10tn in 6 Months
Samsung Electronics’ inventories increased by more than 10 trillion won in half a year, as consumer sentiment has been on the wane due to high inflation and high interest rates.
The company's inventories stood at 52.09 trillion won as of the end of June, up 10.71 trillion won (25.9 percent) from 41.38 trillion won at the end of 2021, according to the Electronic Disclosure System of the Financial Supervisory Service on Aug. 17.
Finished products amounted to 18.69 trillion won, while semi-finished products and work-in-progress were counted at 16.01 trillion won. In addition, raw materials and stored goods amounted to 18.87 trillion won and goods to arrive 1.50 trillion won.
The Korean tech giant’s inventory turnover days also hit an all-time high. Its average number of inventory days in the second quarter was 94 days, two weeks longer than usual, according to DSCC, a global market research firm.
The increase in inventory assets is attributed to consumers postponing the purchase of new home appliances including TVs amid concerns about an economic slowdown due to high inflation and high interest rates. Consumption seems to converge on foods and energy.
The decreased sales of home appliances also made a change in the rankings of Samsung Electronics’ top corporate customers. Best Buy had been consistently among the top 5 for the past three years, but was scratched off, while mobile carrier Verizon reappeared in the rankings.
In the first quarter, Best Buy had 74 days of inventory turnover, a significant increase from 60 in 2021. This unfavorable situation continued in the second quarter as well, sources say. In fact, the utilization rate of Samsung’s video equipment factories for TVs and monitors among others hit 84.3 percent in the first quarter of this year, but it slid to 74.4 percent in the first half, down by 10 percentage points.