SK Hynix is set to make $8.86 billion (10 trillion KRW) in operating profit this year and it will be third South Korean business ever to accomplish such a feat followed by Samsung Electronics and Korea Electric Power Corporation (KEPCO). It is also expected to make $26.6 billion (30 trillion KRW) in annual sales for the first time.
Along with SK Hynix having its best performance due to booming of semiconductor markets, Hyundai Motor Company, LG Electronics, and Naver also had positive performance during third quarter. The Bank of Korea analyzed that South Korean economy made a surprise jump of 1.4% during third quarter due to positive performance by major South Korean businesses.
SK Hynix announced on the 26th that it made $7.18 billion (8.1001 trillion KRW) in sales, $3.31 billion (3.7372 trillion KRW) in operating profit, and $2.71 billion (3.0555 trillion KRW) in net profit at its announcement for third quarter’s performance. Compared to third quarter of last year, its sales, operating profit, and net profit increased by 91%, 415%, and 411% respectively. Compared to previous quarter, they increased by 21%, 23%, and 24% respectively. Its operating profit ratio for third quarter reached whopping 46%.
Until end of third quarter, SK Hynix accumulated $18.7 billion (21.0819 trillion KRW) and $8.2 billion (9.2555 trillion KRW) in sales and operating profit respectively. Stock industries are estimating that SK Hynix will make more than $3.54 billion (4 trillion KRW) in operating profit during fourth and replace previous record of its best performance.
SK Hynix also put out a positive forecast of its business. It is predicting that price will continue to go up as number of demands for DRAMs and NAND flash memories are expected to climb continuously during fourth quarter and amount of increase of supplies is not expected to be much on the other hand.
“It is difficult to rapidly increase amount of DRAM wafers introduced.” said President Lee Seok-hee of SK Hynix at a conference call that was held this day. “Lack of supplies for NAND flash memories will continue even during fourth quarter.”
It is likely that SK Hynix will be able to make at least $26.6 billion (30 trillion KRW) and $11.5 billion (13 trillion KRW) in sales and operating profit respectively this year. Samsung Electronics and KEPCO are the only South Korean businesses to ever make more than $8.86 billion (10 trillion KRW) in annual operating profit. $11.5 billion is the second most operating profit followed by Samsung Electronics’ operating profit.
Industries are interested on how long this economic boom will continue. While some say this is the highest point, others say that price will continue to climb.
Majority of industries believe that price of NAND flash memories will become stable while price of DRAMs will continue to go up. Some predict that amount of supply of NAND flash memories will surpass number of demands by little bit as major businesses finished converting to 3D and are extending their plants. However because it is difficult to reduce line width of DRAM due to technical barrier, amount of investment has increased geometrically. One of the main reasons why these predictions are put out is the fact that Samsung Electronics, SK Hynix, and Micron are only making supplemental investments and are refraining from making investments that will introduce new DRAM wafers.
Estimated growth rate of shipment of memories is either similar or little bit higher than this year. In the past when annual bit growth rate exceeded 50%, most of businesses made losses the following year.
“It is estimated that bit growth rate of DRAM and NAND flash memories will be in the early 20% and middle or later-end of 30% respectively in 2018.” said Department Head (Executive Director) Lee Myung-young of SK Hynix’s Finance Planning Headquarters. This indicates that some of the worries that may think that markets will have sharp turns can be put aside.
On this same day, major businesses such as Hyundai Motor Company, LG Electronics, and Naver also announced their positive performance.
Hyundai Motor Company made $21.4 billion (24.2013 trillion KRW) and $10.6 billion (12.0042 trillion KRW) in sales and operating profit respectively during third quarter. Compared to third quarter of last year, they increased by 9.6% and 12.7% respectively. It has started making a turnaround as its sales have shown positive trends both in domestic and foreign markets excluding Chinese markets.
LG Electronics continued its upward trend of its performance by making $13.5 billion (15.2241 trillion KRW) and $457 million (516.1 billion KRW) in sales and operating profit respectively during third quarter. Compared to third quarter of last year, they increased by 15.1% and 82.2% respectively. Until end of third quarter, it accumulated $39.4 billion (44.4327 trillion KRW) and $1.86 billion (2.1017 trillion KRW) in sales and operating profit respectively. Compared to third quarter of last year, they increased by 9.5% and 53.1% respectively. LG Electronics is expecting that it will be able to make $53.2 billion (60 trillion KRW) in annual sales for the first time this year and make its biggest annual operating profit.
Naver made $1.06 billion (1.2007 trillion KRW) and $276 million (312.1 billion KRW) in sales and operating profit respectively during third quarter. Compared to third quarter of last year and previous quarter, its sales increased by 18.5% and 6.3% respectively due to steady growth in all businesses including Line. Compared to third quarter of last year and previous quarter, its operating profit increased by 10.6% and 9.4% respectively.
Staff Reporter Kwon, Keonho | wingh1@etnews.com & Staff Reporter Oh, Daeseok | ods@etnews.com & Staff Reporter Han, Juyeop | powerusr@etnews.com