Performance Level in First Quarter Is Also Higher Than Expectation
Both Samsung Electronics and LG Electronics recorded better performance in first quarter than expectations and are predicted to make clearer improvement in their performance in second quarter. Especially LG Electronics is predicted to make a surprising performance at the level of earning surprise. As their new-application Smartphones and new household appliances were released in March, full-scale increase in their performance is expected starting from second quarter.
According to stock industry on the 21st, Samsung Electronics’ first quarter performance, which was predicted to be its worst, was better than expectations and LG Electronics is expected to record a surprising first quarter performance that surpasses expectations. It is predicted that their performance will be greatly improved starting from second quarter when sales of their new products become regularized.
According to FN Guide, Samsung Electronics’ first quarter operating profit is predicted to be an average of $4.52 billion (5.2423 trillion KRW). This value is about 12% decrease from first quarter of 2015 and is due to decrease in prices of semiconductor and LCD, seasonal slow season and others. However impact won’t be as big as markets are already expecting worse performance. Some stock firms such as eBEST Investment Securities Co., Ltd. And others are presenting positive predictions by saying that Samsung Electronics’ operating profit will surpass markets’ expectations and reach $4.74 billion (5.5 trillion KRW).
Majority of industries are predicting that LG Electronics will record a good performance at the level of earning surprise in first quarter. Daishin Securities Co., Ltd. And Korea Investment Securities Co., Ltd. are predicting that LG Electronics’ first quarter operating profit will be $396 million (460 billion KRW), which is higher than expectations. Most of other stock firms are also predicting that LG Electronics’ first quarter performance will surpass expectations. Increase in profitability due to sales of premium products, decrease in price of raw materials and others are seen as possible causes of increased performance.
“It is predicted that LG Electronics’ first quarter operating profit will be $397 million (461.3 billion KRW), which is 51.1% increase from first quarter of 2015.” said Park Kang-ho who is a researcher for Daishin Securities Co., Ltd. “It is seen as a earning surprise since it is higher than market’s predicted value at $327 million (380 billion KRW).”
Forecast of second quarter’s performance is more positive than forecast of first quarter’s performance.
After holding a preliminary experience event for Galaxy S7 on the 29th of February, Samsung Electronics set out for preliminary attack by releasing Galaxy S7 on the 11th of this month in 50 countries at the same time. Because number of preorder is exceeding expectations, some people are predicting that Galaxy S7 will have better advertisement than Galaxy S6. Because new products such as TVs, refrigerators and others are going to be released at the end of first quarter, Samsung Electronics is anticipating positive effects from sales of new products in second quarter. It is also predicted that current situations of LCD and semiconductor industries will recover.
“Starting from second quarter, there will be reduction of distributor’s stock and positive effects of release of new products.” said Uh Kyu-jin who is a researcher for eBEST Investment Securities Co., Ltd. “Because performance of DS Sector will rebound also, improvement of overall performance will take place.”
It is expected that LG Electronics will strongly continue atmosphere of increased first quarter performance. LG Electronics is currently promoting G5 after deciding to release G5 on the 31st of this month. Because it had received huge amount of attention at MWC (Mobile World Congress) last month for choosing module method, some people are making careful predictions that it will be a first singular model that surpasses 10 million copies.
If LG Electronics’ new-application Smartphone G5, which had received positive feedbacks after being introduced in February, is released in global markets in second quarter, it is predicted that MC (Mobile Communication) Sector’s performance will convert to surplus. There are predictions already that LG Electronics’ yearly operating profit will surpass $1.72 billion (2 trillion KRW) for the first time since 2009.
KB Investment Securities Co., Ltd. Is predicting that LG Electronics’ sales and operating profit will be $51.9 billion (60.3 trillion KRW) and $1.72 billion (2.3 trillion KRW) this year as it continues sales based on premium products.
It is predicted that TV Business Sectors of Samsung Electronics and LG Electronics will be able to improve their profits due to effect of reduction in production cost even though they are in the midst of display’s prices continuing to become weaker.
Trend of two businesses’ recent stocks is also positive. Although Samsung Electronics’ stock fell to $887 (1.03 million KRW) in August of last year, it recently recovered to back-end of $1,034 (1.2 million KRW) by overcoming collapse of global stock markets in January. Due to expectation of improvement of its performance this month, many foreigners are out to buy Samsung Electronics’ stocks in bulk.
Staff Reporter Kwon, Kunho | wingh1@etnews.com & Staff Reporter Lee, Sungmin | smlee@etnews.com
