Samsung Beats Expectations in Q318 but LGE Misses
October 08, 2018
As expected, Samsung Electronics announced preliminary abbreviated results for 3Q 2018. Sales are expected to be 65t won ($57.53b US) with operating profit of 17.5t won ($15.5b US), implying an operating margin of ~27%. While sales were not quite a record, operating profit was the highest in the company’s history, and both metrics were above consensus of 62.2t won and 17.2t won respectively. Expectations for strong DRAM sales and a recovery in small panel OLED sales at Samsung Display are likely candidates for the improved performance, offset by weak smartphone sales.
Figure 1: Samsung Electronics - Selected Financials
Source: SCMR LLC, Company Data
LG Electronics also announced preliminary results for 3Q 2018. Sales are expected to be 15.4t won ($13.64b US) with operating profit of 746b won ($$660.7m US), which implies an operating margin of ~5%. Both metrics were below consensus of 15.9t won ($14.08b US) and 776b won ($687.33m US), by 3.1% and 3.9% respectively. There has been a great deal of LGE bashing in the Korean trade press that would indicate the potential for really bad quarter, but the preliminary numbers while disappointing are “not bad”. The obvious issues with LGE are poor smartphone sales, and the losses from their OLED TV panel business. However, this quarter, LG Display expects the OLED TV panel business to be profitable but it may have triggered lower profits for TV sales. Details will follow after the 3Q call, which is expected around October 25th.