Q2 sees LG comeback, Samsung sag

Home > Business > Industry

print dictionary print

Q2 sees LG comeback, Samsung sag


With the releases of second-quarter earnings from Samsung Electronics and LG Electronics just around the corner, affiliates of the two companies are expected to show mixed earnings results.

Market analysts predict that Samsung’s smartphone parts makers will post poor earnings due to Samsung Electronics’ sluggish sales, while LG Electronics’ parts makers will produce relatively better reports.

Earnings of flagship Samsung and LG affiliates - such as Samsung Electro-Mechanics, Samsung Display, LG Innotek and LG Display - are expected to be up and down, with most Samsung affiliates expected to post worse results than LG affiliates.

LG Chem released its earnings report on Friday and LG Display, LG Electronics and LG Innotek will announce earnings results today. Samsung SDI will announce its earnings on Friday, Samsung Electro-Mechanics next Tuesday and Samsung Electronics next Thursday.


Samsung’s affiliates will be damaged by Samsung Electronics’ low phone sales, which have been a shock to the company after three years of growth.

As Samsung Electronics is predicting poor earnings for a third straight quarter, all of its parts affiliates also expect to see their earnings shrink.

In the second quarter, Samsung Electro-Mechanics forecasts that its earnings will drop from the same period last year, despite the launch of the Galaxy S5, as sales of its high-density interconnect, multilayer ceramic capacitors and camera modules had not met the earlier expectations due to a slump in low-end smartphone sales.

Local securities market insiders predict that the operating profit of Samsung Electro-Mechanics will be around 50 billion won ($48.76 million).

Samsung SDI, which supplies batteries for smartphones, also implied a sharp drop in its operating profit from a year earlier.

“It was earlier expected that Samsung SDI would post 30 billion won of operating profit, but it is now expected to post lower than that because of sluggish shipments of prismatic batteries to Samsung Electronics,” said Eoh Kyu-jin, an analyst at IBK Investment & Securities.

The situation is likely to drag on for Samsung, even after the launch of its flagship Galaxy S5 in the second quarter, since the third quarter will bring a flood of new products, including Apple’s iPhone 6.

Samsung Electro-Mechanics is expected to post about 2 trillion won in sales for the second quarter, 500 billion won more than that of LG Group’s electronics components manufacturer LG Innotek. But the Samsung affiliate’s operating profit is expected to be lower or similar to that of LG Innotek, at 70 billion won.

As opposed to Samsung, LG Group affiliates are seeing their momentum grow, especially as LG Electronics’ Mobile Communications division in charge of its smartphone business is expected to turn a profit thanks to strong sales of low-end smartphones and the launch of the G3.

LG Innotek is predicted to announce 1.55 trillion won of sales and 73 billion won in operating profit for the second quarter, despite the strong Korean currency.

LG also estimates that its sales of LED screens have increased in the second quarter compared to the same period last year.

LG Display has Apple as a client and also recently signed agreements with Chinese home electronics companies such as Skyworth, Chang Hong and Konka to provide OLED TV panels.

On the Kospi market, LG Display closed 2.91 percent higher, marking its highest closing price in three months at 33,600 won at the expectation of its positive earnings release today.

BY kim jung-yoon [kjy@joongang.co.kr]

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now