Samsung Electronics and LG Electronics are looking to have their greatest year in 2017. While Samsung Electronics is looking to break its previous record of quarterly and yearly performance, LG Electronics is looking to achieve its biggest yearly performance. Both companies started off this year smoothly by having positive performance during first quarter and it is likely that they will be able to break their previous records as forecast after second quarter is also bright.
According to industries on the 15th, it seems that both Samsung Electronics and LG Electronics will be able to achieve their biggest performance ever in 2017. Industries are interested on how high their performance will go up as estimations of their performance in 2017 are continuing to go up.
It is almost certain that Samsung Electronics will have its biggest quarterly performance in this second quarter. According to FN Guide, consensus (average of estimated values from stock firms) on Samsung Electronics’ sales and operating profit in second quarter is $51.7 billion (57.7584 trillion KRW) and $11.4 billion (12.7141 trillion KRW) respectively. Consensus on its operating profit for second quarter easily surpasses Samsung Electronics’ previous highest operating profit in third quarter of 2013 when it was $9.10 billion (10.16 trillion KRW). Some stock firms even estimate that its operating profit will be around $11.6 billion (13 trillion KRW).
It is likely that Samsung Electronics will also achieve its biggest yearly performance ever. Consensus of its yearly sales and operating profit in this year is $207 billion (230.8133 trillion KRW) and $44.0 billion (49.1090 trillion KRW) respectively. It seems that its performance in second half will be even better than its performance in first half due to peak seasons for home appliances and parts.
Booming of semiconductor industries, positive performance from display business, and better performance from Smartphone business that has Galaxy S8 at the front line are seen as the causes of Samsung Electronics’ positive performance. Fact that Galaxy S8 is receiving positive reactions from markets is the cause to increase in previous estimations.
“In spite of weak exchange rate in second quarter, Samsung Electronics will have its best quarter and year due to huge growth of Smartphone business due to release of Galaxy S8, improvement in semiconductor and display businesses, and growth in home appliance business that has entered its peak season.” said Lee Jung who is a researcher for Eugene Investment & Securities Co., Ltd. “It is estimated that its operating profit in second quarter will be around $12.1 billion (13.5600 trillion KRW).”
“If Galaxy S8 receives positive reviews from markets, this will lead to increase in sales of Galaxy Note 8 and it will be possible that performance of IM (IT and Mobile) Business Department will hugely exceed original expectations.” said Soh Hyeon-cheol who is a researcher for Shinhan Investment & Securities Co., Ltd.
LG Electronics is also looking to have its best yearly performance this year. LG Electronics, which recorded its second ever two-digit quarterly operating profit in this past first quarter, is looking to have its best yearly operating profit by maintaining its positive performance even after second quarter. Consensus of its yearly operating profit is $2.44 billion (2.7213 trillion KRW) which is 28% higher than its previous highest operating profit in 2009 when it was $1.91 billion (2.1331 trillion KRW).
One needs to notice that estimations of LG Electronics’ yearly performance in 2017 are continuing to rise as its home appliance business, which is LG Electronics’ major business, recorded operating profit ratio of 11.2% and as LG Electronics was able to greatly reduce loss from its Smartphone business to $179,000 (200 million KRW).
While LG Electronics’ home appliance business, which has strong competitive edge globally, has remained in the center, its Smartphone business that had been slumping for many years has shown fast recovery. LG Electronics has huge expectations that performance of its Smartphone business will increase as it has been making positive progress such as recording 20% of market share in North American Smartphone market in first quarter through its strategic Smartphone called ‘G6’ and others. Some believe that its VC (Vehicle Component) business will start making surplus in second half of this year at the earliest. Due to high expectations, LG Electronics’ stocks have come back to be worth about $71.69 (80,000 KRW).
Mirae Asset Daewoo is estimating that LG Electronics’ yearly operating profit in 2017 will be about $2.73 billion (3.0470 trillion KRW) as it analyzed that performance of LG Electronics’ entire businesses has improved and that there is a possibility that they will remain stable in the future.
“We need to pay careful attention to the fact that LG Electronics had an unparalleled operating profit ratio from its home appliance business in first quarter.” said Kim Hyeon-soo who is a researcher for Taurus Investment & Securities Co., Ltd. “LG Electronics will be able to maintain similar performance in second quarter as it did in first quarter.”
Staff Reporter Kwon, Keonho | wingh1@etnews.com