South Korean electronics giants Samsung and LG seem to be coming out of the Covid-19 economic crisis looking very healthy.
On Wednesday both companies reported preliminary Q2-2021 results, with Samsung indicating it is expecting to show a profit of KRW 12.5 trillion ($11 billion) for the April through June period, up 53% from a year ago. If confirmed later this month, it will be the company’s biggest second-quarter profit since 2018.
Samsung’s gains came largely from its semi-conductor operations, which stepped up output to meet market shortages, and an unexpected one-off gain from its display panel business.
Meanwhile, LG’s tentative Q2 operating profit of KRW 1.1 trillion ($966 million) is expected to be 65.5% higher than the second quarter a year ago, representing a 22.73% increase compared to the same period last year and a 25.58% jump quarter-on-quarter, making it the best performance since the fourth quarter of 2018, the company said.
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LG’s tentative expectations are for consolidated revenues of KRW 17.1 trillion ($15 billion), an increase of 48.1% from the same quarter the previous year and the highest quarterly revenue performance in the company’s history.
However, LG’s statement did not include the impact of the official closure of its LG Mobile Communications Co., which is slated for the end of this month.
The shuttered mobile device unit’s earnings will not be reflected in the final Q2 statement and will be treated as discontinued operating losses, LG said. Earnings for the first quarter of 2021 will also be adjusted to reflect this change, to KRW 17.8 trillion in revenues and KRW 1.8 trillion in operating profit.
As for Samsung, the company’s display business got an unexpected increase from a deal with Apple that reportedly required Apple to reimburse Samsung for missing agreed-to sales targets for organic light-emitting diode (OLED) displays. Samsung said the result will be its highest quarterly revenue in company history.
Samsung’s official report is expected to show a drop in smart phone unit shipments for the period, from about 76 million units is Q1-2021, according to analysts, as a result of mobile processor chip shortages and new Covid-19 outbreaks in India and Vietnam.
Neither of the companies broke out individual performance expectations for their various business groups in the preliminary disclosures.
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By Greg Tarr
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