Latest Sony, Samsung, LG Financials Show Struggling TV Businesses
Sony, Samsung and LG all reported their Q2-2022 financials this week, and when it comes to television sales, things to seem to be going so well.
Sony Group reported revenue from its fiscal Q1-2022 (the three month period ended June 30th) of JPY2.31 trillion ($17.5 billion). Group profits for the quarter were JPY218 billion ($1.65 billion), representing modest increases of 2% and 3% respectively.
Improvements were due largely to increases in Sony Pictures, Sony Music and favorable exchange rates.
But the company’s Entertainment Technologies & Services reported a sharp decline in TV shipments, due to difficult geopolitical conditions and impacted consumer demand.
For the period ended June 30, 2022, Sony reported total TV shipment volume of 1.3 million units (JPY141,793 billion sales to customers), down -41% from 2.2 million units and down -36% from JPY221,021 from the same period a year ago.
The company said that in the period, ET&S businesses sales decreased 4% year-on-year to JPY552.3 billion, primarily due to a decrease in television unit sales resulting from the impact of lockdowns in Shanghai and worsening market conditions, partially offset by the favorable impact of foreign exchange rates, Sony said. Operating income from the segment decreased by JPY18.2 billion year-on-year to JPY53.6 billion, also due to the impact of the decrease in television sales.
Due to a faster than expected improvement in the utilization of manufacturing facilities following the Shanghai lockdown and a faster than expected improvement in supply constraints for components, centered on semiconductors primarily for digital cameras, Q1 operating income significantly exceeded Sony’s previous forecast.
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Looking ahead to the full fiscal year 2022, Sony said it expects sales to increase JPY50 billion from the previous forecast to JPY2 trillion 450 billion, primarily due to the impact of foreign exchange rates, partially offset by our incorporating the risk of market deceleration into our forecast for the second half of the fiscal year.
To improve sales, Sony plans to implement additional measures such as improvements in product mix and cost controls in anticipation of even more risks.
Sony said the inventory level at the end of June was a little high even excluding the increase in valuation of the inventory due to the depreciation of the yen and the strategic stockpile of parts. The company plans to adjust inventory levels in preparation for the expected softening of demand in the product markets going forward. The company is also promoting the transfer of production across multiple facilities, decentralizing the production of key components and
digitizing and further optimizing operations.
Samsung Electronic’s second quarter (ended June 30th) showed record sales of KW77.2 trillion ($59 billion), up 21.25% from a year earlier, due largely to strong semiconductor and memory sales.
Net income for the period rose 15.91% to KW10.95 trillion from KW9.45 trillion in the same quarter last year. Operating profit grew 12.18% to KW14.10 trillion from the previous year.
Earnings in the Visual Display Business, which is responsible for TVs and digital appliances, logged an operating profit of KW360 billion ($276.1 million U.S. dollars) on revenue of KW14.83 trillion ($11.4 billion), due mostly to strong sales in applicances.
The company said demand for TVs contracted in the second quarter due to weak seasonality and economic uncertainties from surging inflation and high-interest rates, although Samsung was able to maintain its top ranked global TV market share position in the period.
Samsung Display Corporation (SDC) which makes video display panels for TVs smartphones, PC monitors etc, showed record second-quarter revenue and operating profit for mobile displays driven by solid demand from major customers. Performance in the large panel business was weaker due to initial ramp-up costs of quantum-dot (QD) displays and a decline in LCD prices.
The MX (Mobile eXperience) Business posted a sequential decline in earnings as material and logistics costs rose, but revenue increased from a year earlier driven by sales of premium models. The Networks Business saw an increase in revenue from the previous quarter and added DISH Network as a customer. Operating profit from the mobile phone and networks division was KW2.62 trillion ($2 billion) on revenue of KW29.34 trillion (22.5 billion U.S. dollars).
Samsung said overall mobile phone demand weakened in the second quarter on geopolitical risks in Europe, worry about inflation and weak seasonality, but supply disruptions in the first quarter were mostly resolved.
The company said the war in The Ukraine and COVID-19 lockdowns are expected to cause a decline in mobile display sales for the year. Looking further ahead, the company said it plans to reinforce its leadership in the premium OLED display market, and also secure a solid position in the automotive EV market, for which Samsung will offer a full lineup of solutions, from rigid to foldable displays.
LG Electronics Q2-2022
Meanwhile, LG Electronics announced record second-quarter earnings, thanks to strong sales of LG home appliances in key regions and profitable growth in LG’s vehicle components business as the global auto industry recovers .
LG reported revenue of KW19.5 trillion in the second quarter of 2022, up 15% from the same quarter a year earlier. Second-quarter operating profit was KW792.2 billion, down 12% from the same quarter last year, largely due to supply chain challenges and higher logistics costs.
In reaction to the continuing pandemic and economic conditions, LG said it is leveraging its comprehensive business portfolio, expanding sales of premium to mass-level products and growing areas of business to business, such as auto parts.
The LG Home Entertainment company reported revenue of KW3.46 trillion in the second quarter and an operating loss of KW18.9 billion, reflecting increased marketing investments in response to intensified market conditions. LG said its strategy for Home Entertainment will focus on effectively managing marketing spend and growing the premium TV segment, especially around peak sales seasons, including the FIFA World Cup and holidays.
LG Display, which makes video display panels for TVs, mobile devices etc., reported a net loss of around $290 million (down from a profit of around $320 million a year ago), attributed to a 14.6% sales decline. The loss resulted from weak demand for TV and IT displays, coupled with supply chain issues and the lockdowns in China. Going forward, LGD plans to continue to reduce its LCD TV business, and to stop LCD production in Korea in 2023, earlier than previously expected. The company will focus instead on OLED TV panels and the automotive market, and will aim to open up new markets for transparent and gaming OLEDs.
LG Home Appliance & Air Solutions reported revenue of KW8.07 trillion in the second quarter. Operating profit was KRW432.2 billion. Revenue rose 18% from the second quarter a year ago, primarily driven by stronger sales of premium home appliances and new categories such as hygiene products with steam technology in key regions of the Americas North and Latin America.
LG Vehicle Component Solutions saw second-quarter sales of KW2.03 trillion, up 19% from the same period in 2021, bringing the business unit to profitability for the first time. The higher sales were attributed to proactive steps to increase demand from automakers with efficient supply chain management. In the current economic climate, the company said it would continue to build strong relationships with global automakers and implement sound cost structure management.
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By Greg Tarr
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