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Samsung, LG see 40% gain in Q1 profits
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South Korea鈥檚 two biggest electronics firms both forecast jumps of around 40 percent in their first-quarter operating profits yesterday, with coronavirus-driven working from home fueling global demand for semiconductors and home appliances.
Tech behemoth Samsung Electronics said in an earnings estimate that it expected operating profit of 9.3 trillion won (US$8.3 billion) for January to March, up 44.2 percent from a year earlier, largely driven by robust sales of smartphones and the launch of its flagship Galaxy S21 series.
Meanwhile, LG Electronics, South Korea鈥檚 second-largest appliance firm after Samsung, forecast a 39.2 percent jump in operating profit for the same period, to 1.5 trillion won.
鈥淏oth quarterly revenue and operating profit are the highest in the company鈥檚 history,鈥 it said in a statement.
The Samsung figures were ahead of expectations, said Gloria Tsuen, vice president at Moody鈥檚 Investors Service, adding that 鈥渢ight supplies in the semiconductor segment, especially DRAM,鈥 among others, had helped the firm.
Analyst forecasts had averaged 8.88 trillion won according to Bloomberg News.
Samsung Electronics is the flagship subsidiary of Samsung group, the largest of the family-controlled empires known as chaebols that dominate business in South Korea, the world鈥檚 12th-largest economy.
It is crucial to the country鈥檚 economic health 鈥 the conglomerate鈥檚 overall turnover is equivalent to a fifth of the national gross domestic product.
The coronavirus has wreaked havoc on the world economy, with lockdowns and travel bans imposed around the globe for several months.
But the pandemic 鈥 which has killed over 2.8 million people worldwide 鈥 has also seen many tech companies boom.
The global move to working from home has seen consumer demand rise for devices powered by Samsung鈥檚 chips, as well as home appliances such as TVs and washing machines.
Its estimated sales for the period were up 17.5 percent year-on-year to 65 trillion won.
Analysts say the company has had a particular boost from rolling out its Galaxy S21 series in January, more than a month ahead of the flagship product鈥檚 usual annual launch schedule.
鈥淜ey to the success of this latest flagship has been its lower US$799 starting price,鈥 tracker Counterpoint Research said in a report.
鈥淟ower cost coupled with trade-in offers that essentially make the S21 device free, is helping increase demand for these 鈥榚ntry-level鈥 flagships.鈥
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