Electronics Industry to Announce Q2 Earnings This Week... "Continues Strong Performance"

[Image source=Yonhap News]

[Image source=Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The second-quarter earnings of the electronics, semiconductor, and display industries, including Samsung Electronics, LG Electronics, and SK Hynix, will be announced this week. Due to the continued impact of COVID-19 and the ongoing untact culture, most are expected to maintain a favorable trend.

According to the industry on the 25th, Samsung Electronics and LG Electronics will announce their finalized second-quarter earnings for this year on the 29th. SK Hynix will announce its second-quarter earnings on the 27th, LG Display and Samsung Electro-Mechanics on the 28th, and LG Innotek will also release its second-quarter earnings on the 29th.

Earlier this month, Samsung Electronics and LG Electronics announced their preliminary second-quarter earnings. Samsung Electronics reported sales of 63 trillion KRW and operating profit of 12.5 trillion KRW for the second quarter of this year. Compared to the same period last year, sales increased by 18.94% and operating profit by 53.37%, significantly surpassing market expectations of 61 trillion KRW in sales and 11 trillion KRW in operating profit, recording an 'earnings surprise.' The sales figure is the highest ever for the second quarter, and the operating profit is the highest in 11 quarters since the third quarter of 2018.

This earnings surprise is analyzed to have been driven by the semiconductor business. Although detailed earnings were not disclosed, the industry estimates that operating profit from semiconductors alone exceeded 7 trillion KRW in the second quarter. This was due to strong demand for semiconductors amid COVID-19, which led to robust prices for DRAM and other products. Additionally, the display division recorded a one-time reversal of provisions.

LG Electronics preliminarily reported second-quarter sales of 17.1101 trillion KRW and operating profit of 1.1128 trillion KRW, representing increases of 48.4% and 65.5%, respectively, compared to the same period last year. Sales marked the highest ever for the second quarter, and operating profit was the largest in 12 years since 2009. For LG Electronics, the HE division, responsible for home appliances (H&A) and TVs, appears to have driven the strong performance. It is estimated that LG Objet Collection and OLED TVs led to the highest half-year performance on record in the first half of this year. Based on half-year sales, LG Electronics also surpassed Whirlpool in the U.S., securing the number one position in the global home appliance market.

[Image source=Yonhap News]

SK Hynix is also expected to post results exceeding market expectations, buoyed by the booming memory semiconductor market. According to financial information provider FnGuide, SK Hynix is forecasted to achieve second-quarter sales of 10 trillion KRW and operating profit of approximately 2.7 trillion KRW. The rising prices of DRAM and NAND flash, SK Hynix's main products, are expected to drive this earnings growth.

LG Display is anticipated to record strong earnings due to the rapidly growing OLED panel market and recent increases in LCD panel prices. Some forecasts suggest LG Display's second-quarter operating profit will be around 700 billion KRW, marking the highest performance in four years since the second quarter of 2017. The large OLED panel business for TVs is expected to turn profitable starting in the third quarter, so the second quarter is likely to show results close to the break-even point.

Samsung Electro-Mechanics and LG Innotek are also expected to post strong results in the seasonally slow second quarter. Due to steady sales of electronic products amid COVID-19, component manufacturers' earnings have significantly improved. Samsung Electro-Mechanics likely benefited from increased sales of multilayer ceramic capacitors (MLCC). The securities industry estimates operating profit to reach around 320 billion KRW, more than 200% higher than the same period last year. LG Innotek's optical solutions division, responsible for producing camera modules used in smartphones, is expected to lead strong performance, with second-quarter operating profit projected to be in the 140 billion KRW range.