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Samsung logo of the Samsung office building in Seocho-dong, Seoul. Newsis
Although Samsung Electronics hit a record in the third quarter, it is expected to underperform in the fourth quarter. This is due to the observation that the established business, which led performance in Q3, will be relatively slow in Q4. The prolonged uncertainty of the new coronavirus infection (Corona 19) is also a factor lowering expectations for Q4 results.
According to Samsung Electronics on the 30th, consolidated sales in the third quarter recorded KRW 66 billion and an operating profit of KRW 12.35 billion. Sales are the highest performance ever, topping the previous quarterly high in the fourth quarter of 2017 (65.98 trillion won). Operating profit also increased by 58.8% compared to the same period last year, showing explosive growth even at Corona 19.
Samsung Electronics’ third-quarter earnings can be seen as the steady advance of mobile devices, appliances and semiconductors amid strong business. Samsung Electronics explained that “the demand for fixed products in the third quarter increased more than expected” and “the sales volume expanded enormously through the use of the global supply management network (SCM).”
However, the outlook is predominantly that Q4 results will be slower compared to Q3. Samsung Electronics explained in a conference call after the earnings announcement, “(Q4 results) overall profitability is expected to decline due to lower demand for server memory and intensifying competition in the joint business.
In the semiconductor division, demand for mobile devices and PCs is strong, but inventory adjustments by customers are expected to continue. In particular, the aftermath of the suspension of transactions with Huawei, a major customer of Samsung Electronics, is expected to be reflected as of Q4. Also, the drop in server DRAM prices is also a burden.
Samsung Electronics said: “Server customer inventory adjustments will continue through the fourth quarter,” but also noted that “as server manufacturers’ inventory is improving in the first half of next year, conservative investments in the second half of this year will also show a recovery in the first half of next year. “
In the mobile sector, the launch of new products by competitors such as Apple is expected to increase marketing costs and reduce profitability. It is also observed that the effect of the potential demand for household appliances is difficult to continue until Q4.
Eugene Investment & Securities said, “In the fourth quarter, sales will drop to 62 trillion won and operating profit will be around 10 trillion won in the fourth quarter due to a drop in the won-dollar exchange rate, a decrease in Huawei’s semiconductor sales and a sharp increase in shipments in the set division in the third quarter. ” He looked out.
The outlook for next year is also bad. Samsung Electronics explained: “In 2021, global demand is expected to recover, but uncertainties such as the possibility of Corona 19 reproliferation are expected to persist,” he said. “Investment plans to maintain a flexible response posture while preparing for medium and long-term demand.” .
Reporter Kwon Seong-do [email protected]
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