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SEC and LGE Release Preliminary Q220 Financials: Revenue Down Y/Y and Q/Q
July 12, 2020
Samsung Electronics released preliminary 2nd quarter results with sales of 52t won ($43.46b US), down 7% Y/Y and down 6% sequentially, operating profit was 8.1t won ($6.77b US), up 23% sequentially. Included in the results was a 1t won ($836m US) payment from Apple (AAPL) to meet contract obligations at Samsung Display similar to last year’s Apple payment of 800t won ($669m US). Better than expected results from DRAM (pricing up) and chip demand overall, stemming from work-at-home server demand, and PC/laptop demand. TV sales were better as sequestered customers upgraded on-line, also reducing marketing costs, while appliance and smartphone sales were weak.
LG Electronics also reported preliminary 2nd quarter results with sales of 12.84t won ($10.74b US), down 17.9% Y/Y and 13% sequentially, with operating profit of 493.1b won ($412.6m US), down 24.4% Y/Y and down 54.8% sequentially. While home appliance sales dragged down sales early in the quarter, store re-openings boosted appliance sales in the back end of the quarter, although LG’s handset business remained weak.
Given that South Korea recovered quickly from the COVID-19 virus, results reflect a return of regional demand for physical products and chip level demand globally. Some DRAM stockpiling could have increases Samsung’s chip sales as prices rose along with demand, but demand should level off as Europe and Asia move past the pandemic peak. Both companies should be cautious for 3Q, given the state of the virus in the US, South America, and more recently Africa.
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