Samsung Electronics and LG Electronics Expected to Have Their Best Annual Performance in 2017

Sep 25, 2017

Samsung Electronics and LG Electronics, which are the top two businesses out of South Korea’s electronic industries, are having their best annual performance in 2017 and seeing their businesses grow quickly. It is expected that their performance and businesses will continue to grow until next year as they both have stable business portfolios. It is likely that they will continue to be top two businesses as they are even strengthening their future businesses such as automotive parts and AI (Artificial Intelligence) that will become their driving forces in the future.
According to industries on the 24th, it is almost certain that Samsung Electronics and LG Electronics will have their best annual performance in this year. Their stocks also rose sharply as their performance have skyrocketed.
Samsung Electronics made its best quarterly operating profit in this past second quarter by making $12.4 billion (14 trillion KRW) and it is expected that record will be broken again in third quarter and fourth quarter. It is estimated that Samsung Electronics, which made close to $21.2 billion (24 trillion KRW) in operating profit during first half of this year, will make at least $44.1 billion (50 trillion KRW) in annual operating profit this year which will be its first time ever.
Its semiconductor business, which is the top contributor for its performance increase, is going through best times ever. On top of its semiconductor business, its display business centered on flexible OLED is showing positive performance and its Smartphone business, which slowed down due to discontinuation of Galaxy Note 7, has got back on the track again. Its home appliance business is also continuing to have stable performance.

Aerial view of Samsung Electronics’ Pyeongtaek Campus <Aerial view of Samsung Electronics’ Pyeongtaek Campus>

It is likely that LG Electronics will also have its biggest year in 2017. As its home appliance business showed 10% of operating profit ratio during first half of this year, it provided its competitive edge in global home appliance industries. Operating profit ratio between LG Electronics compared to its competitors is almost twice in difference. While its Smartphone business, which had struggled, is slowly lowering amount of its loss, its VC (Vehicle Component) business that has been its driving force is continuing to grow every quarter.
LG Electronics made $1.40 billion (1.5856 trillion KRW) in operating profit during first half of this year which surpasses its last year’s operating profit of $1.18 billion (1.3378 trillion KRW). It is expected that this year’s operating profit will double the operating profit from last year. Starting from next year, its VC business will start to make surplus along with increase in sales. Increase in overall performance of entire LG Group is also expected.
Their stocks also rose due to increase in their performance. Samsung Electronics’ stocks are making records as they are worth more than $2,294 (2.6 million KRW). LG Electronics’ stocks are worth $79.41 (90,000 KRW) again for the first time since 4 years ago and are rising as well.

LG Electronics’ ultra-premium build-in home appliance called ‘Signature Kitchen Suite Showroom’
<LG Electronics’ ultra-premium build-in home appliance called ‘Signature Kitchen Suite Showroom’ >

It is not simply just their positive performance that is helping with their stocks. Rise in their stocks is also due to positive forecast of their medium and long-term growth. In terms of Samsung Electronics, it is expected that semiconductor business will continue to boom until next year and it seems that its Smartphone business will also take one step forward. It has secured driving force for its electric device business by acquiring Harman and it is also positive that it is increasing the amount of investments that it is making for its AI platform called Bixby.
Along with solid competitive edge in home appliance business, LG Electronics is drawing huge expectations for its VC business that is growing quickly. When it succeeds in acquiring ZKW, which is a lighting company in Austria for cars, it is expected that it will become a new turning point for its VC business.
As Samsung Electronics and LG Electronics, which are leading South Korea’s electronic industries, are making positive performance, back-end ecosystem is also benefiting as well.
“Fact that businesses of Samsung Electronics and LG Electronics are doing well will help their partners to have better performance and ultimately bring out positive effects from entire electronic industries in South Korea.” said a representative for an electronic industry. “Fact that semiconductor and display equipment manufacturers had their performance soar is a prime example.”
Staff Reporter Kwon, Keonho | wingh1@etnews.com

■Trend of annual operating profits of Samsung Electronics and LG Electronics
▲Samsung Electronics &#8710;2015: $23.3 billion (26.4134 trillion KRW) &#8710;2016: $25.8 billion (29.2407 trillion KRW) &#8710;2017 (estimated): $47.4 billion (53.7438 trillion KRW) &#8710;2018 (estimated): $53.3 billion (60.3551 trillion KRW) &#8710;2019 (estimated): $53.6 billion (60.7150 trillion KRW)
▲LG Electronics &#8710;2015: $1.05 billion (1.1923 trillion KRW) &#8710;2016: $1.18 billion (1.3378 trillion KRW) &#8710;2017 (estimated): $2.31 billion (2.6208 trillion KRW) &#8710;2018 (estimated): $2.52 billion (2.8557 trillion KRW) &#8710;2019 (estimated): $2.67 billion (3.0293 trillion KRW)
Reference: FnGuide <■Trend of annual operating profits of Samsung Electronics and LG Electronics ▲Samsung Electronics ∆2015: $23.3 billion (26.4134 trillion KRW) ∆2016: $25.8 billion (29.2407 trillion KRW) ∆2017 (estimated): $47.4 billion (53.7438 trillion KRW) ∆2018 (estimated): $53.3 billion (60.3551 trillion KRW) ∆2019 (estimated): $53.6 billion (60.7150 trillion KRW) ▲LG Electronics ∆2015: $1.05 billion (1.1923 trillion KRW) ∆2016: $1.18 billion (1.3378 trillion KRW) ∆2017 (estimated): $2.31 billion (2.6208 trillion KRW) ∆2018 (estimated): $2.52 billion (2.8557 trillion KRW) ∆2019 (estimated): $2.67 billion (3.0293 trillion KRW) Reference: FnGuide>

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