2017 May Be The Best Performance Year for Samsung and LG
October 10, 2017
Etnews said that Samsung Electronics and LG Electronics are having their best annual performance in 2017 and seeing their businesses grow quickly. It is expected that their performance and businesses will continue to grow until next year as they both have stable business portfolios. It is likely that they will continue strengthening their future businesses such as automotive parts, displays and AI (Artificial Intelligence) that will become their driving forces in the future. According to analysts, it is almost certain that Samsung Electronics and LG Electronics will have their best annual performance in this year. Their stocks also rose sharply as their performance have skyrocketed. Samsung Electronics made its best quarterly operating profit in this past second quarter by making $12.4 billion (14 trillion KRW) and it is expected that record will be broken again in third quarter and fourth quarter. It is estimated that Samsung Electronics, which made close to $21.2 billion (24 trillion KRW) in operating profit during first half of this year, will make at least $44.1 billion (50 trillion KRW) in annual operating profit this year, which will be its first time ever. Its semiconductor business, which is the top contributor for its performance increase, is going through best times ever. On top of its semiconductor business, its display business centered on flexible OLED is showing positive performance and its Smartphone business, which slowed down due to discontinuation of Galaxy Note 7, has got back on the track again. Its home appliance business is also continuing to have stable performance.
Figure 1: Aerial view of Samsung Electronics’ Pyeongtaek Campus
Source: Google Earth
LG Electronics will likely also have its biggest year in 2017. As its home appliance business showed 10% of operating profit ratio during first half of this year, it provided its competitive edge in global home appliance industries. Operating profit ratio between LG Electronics compared to its competitors is almost twice in difference. While its smartphone business, which had struggled, is slowly lowering its loss, its VC (Vehicle Component) business has been its driving force and is continuing to grow every quarter. LG Electronics made $1.40 billion (1.5856 trillion KRW) in operating profit during first half of this year, which surpasses its last year’s operating profit of $1.18 billion (1.3378 trillion KRW). It is expected that this year’s operating profit will double the operating profit from last year. Starting from next year, its VC business will start to make surplus along with increase in sales. Increase in overall performance of entire LG Group is also expected. Samsung Electronics’ stocks are making records as they are worth more than $2,294 (2.6 million KRW). LG Electronics’ stocks are worth $79.41 (90,000 KRW) again for the first time since 4 years ago and are rising as well. It is not simply just their positive performance that is helping with their stocks. Rise in their stocks is also due to positive forecast of their medium and long-term growth. In terms of Samsung Electronics, it is expected that semiconductor business will continue to boom until next year and it seems that its Smartphone business will also take one step forward. It has secured driving force for its electric device business by acquiring Harman and it is also positive that it is increasing the amount of investments that it is making for its AI platform called Bixby. Along with solid competitive edge in home appliance business, LG Electronics is drawing huge expectations for its VC business that is growing quickly. When it succeeds in acquiring ZKW, which is a lighting company in Austria for cars, it is expected that it will become a new turning point for its VC business.
As Samsung Electronics and LG Electronics, which are leading South Korea’s electronic industries, are making positive performance, back-end ecosystem is also benefiting as well. Samsung Electronics and LG Electronics are doing well will help their partners to have better performance and ultimately bring out positive effects from entire electronic industries in South Korea.” said a representative for an electronic industry. “Fact that semiconductor and display equipment manufacturers had their performance soar is a prime example.”
Table 1: Samsung Electronics and LGE Profits (US$b)
Source: FN Guide