‘The LG trio of materials and parts,’ i.e. LG Display, LG Innotek and LG Hausys, are expected to see their operating profits double in the 4th quarter of 2014 year on year. SK Hynix is certain to generate the largest quarterly operating profit ever in the 4th quarter. Samsung Electro-Mechanics and Samsung SDI are also predicted to show some signs of escaping poor performance.
On January 22, Electronic Times and FN Guide analyzed the Q4 performance of listed companies in the materials and parts sector, affiliated with large corporations, as estimated by major securities companies (average of the estimations by different securities companies), and the analysis results are as follows. Among the 8 analyzed companies, the sales of 7 companies, except for LG Chem, are expected to increase. The Q4 sales of large corporations in the materials and parts sector are said to have improved year on year. These large corporations are scheduled to announce their performance in 2014 and Q4 2014 starting next week one after another.
The Q4 performance of companies in the LG Group is forecast to get better conspicuously. LG Display is expected to generate the largest quarterly profit in its history. Its sales will increase by 8.9% over the previous year to KRW7,735.9 billion, and its operating profit will go up by 143.9% to KRW626.4 billion. It has the largest share of the market, and it had the best time ever due to the short supply of displays at the end of the year.
LG Innotek’s sales and operating profit are estimated to be KRW1,735.4 billion and KRW63.3 billion, respectively. They went up by 12.4% and 119.3% year on year. LG Hausys is also expected to see their sales and operating profit go up by 4.5% and 162.6% respectively.
However, LG Innotek began to bounce back from last year’s slump as its camera module business was doing well with foreign customers, such as Apple, but since the LED business division continues to be sluggish, the consensus is that it is still uncertain whether it is a full-scale turnaround. The operating profit and net profit of LG Hausys also declined from the previous quarter. The ‘base effect’ of the previous year is thought to be very big. LG Chem is predicted to have its sales and operating profit decrease slightly due to the conditions of the petrochemical industry.
With the DRAM booming, the Q4 performance of SK Hynix is expected to be the greatest ever. With its quarterly sales approaching KRW5 trillion, its operating profit is expected to be more than KRW1.5 trillion. Its sales and operating profit are forecast to increase by 47.5% and 99.0% over the 4th quarter of 2013.
Samsung affiliates in the materials and parts sector are also recovering. The sales and operating profit of Samsung Electro-Mechanics are expected to amount to KRW1,848.2 billion and KRW28.1 billion respectively. Its sales are forecast to go up by 7.3%, and its operating profit is expected to be in the black again. The quarterly sales and operating profit of Samsung SDI are also expected to be KRW1,976.7 billion and KRW43 billion respectively. This company is also expected to go from a deficit in the 4th quarter of 2014 to a surplus. Samsung Fine Chemicals is thought to have a negative operating profit in the 4th quarter of 2014 as well. Samsung Electro-Mechanics hopes to sell its sales greatly boosted by the electronic parts and electronic shelf labels (ESL) for the Samsung Galaxy S6, whereas Samsung SDI expects that the performance of the materials business focused on the polarizing film will greatly improve in 2015.