Samsung, LG Elec deliver above-consensus Q1 earnings

Samsung Electronics Co. and LG Electronics Inc., the world's two largest TV makers, surprised the market on Wednesday with forecast-beating quarterly results, led by brisk sales of TVs and other home appliances amid the prolonged stay-at-home trend.

Samsung, the world's top memory chipmaker, reported operating profit of 9.3 trillion won ($8.3 billion) for the first quarter ending Mar. 31, according to its regulatory filing on Apr. 7.

Its quarterly earnings were far ahead of the 8.6 trillion won market consensus and represent a 44.2% surge from the year-earlier period. Increased smartphone shipments offset the impact of the February shutdown of its US semiconductor plant caused by the US cold spell.

Samsung's January to March earnings compare with the 9 trillion won operating profit it posted for the fourth quarter of last year, weighed by falling memory chip prices and the stronger won that eroded its translated earnings.

Sales climbed 17.5% to 65 trillion won in the first quarter, close to its record-high 67 trillion won reported for the third quarter of 2020.

Samsung provided no details for the preliminary quarterly results. But analysts projected the company's IT and mobile communications division, in charge of smartphones, had earned more than 4 trillion won in operating profit in the January-March quarter. Samsung rolled out its next flagship series, the Galaxy S21, in January, two months earlier than its usual annual schedule.

Its consumer electronics division is estimated to have posted around 1 trillion won in operating profit, with the semiconductor business seen to have earned around 3.5 trillion won.

LG ELECTRONICS AT RECORD QUARTERLY RESULTS

For the first quarter, LG flagged its largest-ever operating profit of 1.5 trillion won, up 39.2% year on year. Sales hit a record 18.8 trillion won, up 27.7% from a year earlier.

Analysts had expected its quarterly operating profit to be in the lower end of the 1 trillion won range, compared to its previous record of 1.2 trillion won set in the second quarter of 2009.

Rising demand for premium TVs and home appliances eclipsed consecutive losses from its smartphone business.

Earlier this week, LG announced its exit from the mobile phone business, which has accumulated operating losses of 5 trillion won, putting its focus on automotive parts and robotics as well as its flagship home appliance business. 

The withdrawal from the smartphone market is expected to improve LG's bottom line from the current quarter, pushing its 2021 operating profit to a new record in the 4 trillion won range, analysts said.

Write to Jung-dong Roh and Sin-Young Park at dong2@hankyung.com
Yeonhee Kim edited this article.