Samsung affiliates miss market estimates in Q1
The group’s construction, battery, fashion and retail units particularly suffered amid unfavorable market conditions and heavy internal spending.
Eight affiliates including Samsung SDS, Samsung SDI, Samsung Engineering and Cheil Industries all posted weaker-than-expected earnings for the first three months of the year.
The operating profit of Cheil Industries, Samsung’s retail and leisure arm and de facto holding company, was 6 billion won ($5.5 million), 85.91 percent lower than estimates.
Increases in marketing costs took away from profits in the fashion business, while investment in the hospitality unit affected earnings.
Earnings at Samsung SDI, the chemical and battery subsidiary, showed the second-largest gap at 77.09 percent lower than estimates.
The company saw its operating profit tumble 81.6 percent compared to the previous quarter to 6.8 billion won, with sales also declining 2.32 percent to 1.87 trillion won over the period.
Seasonally low demand in the battery sector dragged down its sales and profits, Samsung SDI explained in a statement.
Samsung Heavy Industries, the shipbuilding unit, reported profit of 26.3 billion won, 74.7 percent lower than estimates. Although the nation’s second-largest builder managed to turn a profit, the results were weaker than expected due to the still-gloomy global shipbuilding industry.
Other Samsung affiliates that posted weaker-than-expected earnings included Samsung Fine Chemicals and Samsung C&T, the group’s construction arm.
Still, other units posted earnings that were stronger than expected.
Samsung Electronics’ operating profit in the first quarter fell 29.56 percent year-on-year, but it improved 13.7 percent to 5.98 trillion compared to the previous quarter. Profit was up 9.89 percent from estimates compiled by FnGuide, backed by strong semiconductor sales.
Operating profit in the semiconductor business rose to 2.93 trillion won, accounting for almost half of the company’s total.
With the popularity of its latest flagship S6 and S6 Edge smartphones, some analysts project that operating profits in the second quarter are likely to reach 7 trillion won.
Samsung Electro-Mechanics also had a highly profitable first quarter thanks to strong demand for the electronic components used in smartphones, beating estimates by 12.47 percent, the research firm said.
The parts company that supplies electronic components to Samsung Electronics and other partners said that its operating profit rose to 80.6 billion won, a 302.6 percent increase from a year earlier.
Net income surged to 41.7 billion won, an 867.1 percent jump compared with the same period a year ago.
Samsung Electro-Mechanics cited strong sales of telecommunications modules and passive parts for smartphones, offsetting declining sales of power modules and other electric components used in TVs and PCs.
Cheil Worldwide, the group’s advertising arm, and defense company Samsung Techwin also beat estimates.
BY PARK EUN-JEE [email@example.com]
with the Korea JoongAng Daily
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