Samsung and LG Slowdown

Samsung Electronics and LG Electronics are set to announce falling sales of home appliances and TVs in the second quarter as people have been spending more time outside rather than staying home,
“Demand for home appliances and TVs continued to slow down in the second quarter, as the global economic downturn and inflation intensified. This is expected to have adversely affected the profitability of product makers,” an official from a local home appliance company said on condition of anonymity.

“Home appliance makers focused on selling premium models and new models during the second quarter due to the expected drop in demand in the market. They also have started to enhance profitability by expanding the global market for their products,” another industry official said, asking not to be named.

The two home appliance makers will announce their preliminary earnings for the April-June period on July 7. According to the consensus among local brokerage houses, Samsung is expected to announce sales of 77.22 trillion won ($59.46 billion) and 14.79 trillion won in operating profit in the second quarter, up 21 percent and 18 percent, respectively, from a year ago.

Though the figures have improved from the same period in 2021, the numbers are lower than the forecast made in May. At that time, the consensus showed Samsung would post 78.68 trillion won in sales and 15.29 trillion won in operating profit.

“Samsung Electronics’ second-quarter earnings are expected to fall below expectations due to a decrease in demand for set businesses such as smartphones, TVs and home appliances,” Kim Dong-won, a researcher at KB Securities, said.

“Considering macro-economic uncertainties such as inflation, disruption of parts supply chains and the Russia issue, it is unlikely that demand for smartphones and PCs will be offset by demand for memory in servers and displays for iPhones alone,” the researcher added.

Market consensus also showed that LG Electronics, where home appliances account for a larger portion of sales than Samsung, is expected to post 19.39 trillion won in sales and 866.4 billion won in operating profit. The latter figure is a sharp drop from the second quarter of 2021 when it posted 1.11 trillion won in operating profit.

The KB Securities researcher said that LG’s second-quarter operating profit is expected to decrease, but the company’s Vehicle component Solutions Division will offset the falling earnings as the division, which mainly sells infotainment systems for vehicles, is expected to shift a surplus.

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