Samsung Electronics recorded an ‘earnings shock’ (performance shock) that fell far short of market expectations in the fourth quarter of last year. It surpassed 300 trillion won in annual sales for the first time in history, but the light faded as operating profit plummeted to the level of one-third. The industry pays attention to the timing of Samsung Electronics’ earnings recovery. The prevailing view is that the situation will not improve for the time being.
According to the industry on the 7th, Samsung Electronics announced the preliminary results the previous day (6th). It is about the business performance in the fourth quarter of last year, with sales of 70 trillion won and operating profit of 4.3 trillion won. This is a decrease of 8.58% in sales and 69% in operating profit compared to the fourth quarter of 2021. Compared to the previous quarter, they decreased by 8.83% and 60.37%, respectively. It is the first time in about eight years since the third quarter of 2014 (4.06 trillion won) that operating profit fell below 5 trillion won.
It did not fit the eye level of the stock market, which expected ‘operating profit to be cut in half’. The brokerage firm’s performance consensus 토토사이트 (average forecast) was around 6 trillion won in operating profit. It is truly an ‘earning shock’. This is why the atmosphere inside Samsung is inevitably heavy even if it achieved a new era by achieving 301.77 trillion won in annual sales exceeding 300 trillion won for the first time as a domestic company by adding 70 trillion won in sales.
Performance by business division was not disclosed. However, Samsung Electronics issued explanatory data and revealed the background of the sluggish performance. Samsung Electronics explained, “In the memory business, purchase demand in the fourth quarter decreased significantly compared to expectations as customers strengthened their fiscal stance due to the continued high interest rate situation and the contraction of consumer sentiment due to the prospect of economic recession.”
Samsung Electronics also said, “The price continued to decline during the quarter due to the intensifying pressure to deplete stocks from suppliers’ inventory increases, and the range of price declines was wider than originally expected, resulting in a sharp drop in performance.” And the home appliance business also suffered from sluggish demand and continued cost burden, leading to a deterioration in profitability.” In fact, it means that the situation was not good across all sectors.
In particular, the industry cites the sluggish performance of memory semiconductors as a decisive deterioration in performance. In a situation where the profitability of other businesses is deteriorating for a long time amid the global economic recession, it is evaluated that even the semiconductor, which has been playing a role in supporting performance, has revealed its limitations. As of 2021, the semiconductor business accounts for more than half (56.6%) of Samsung Electronics’ operating profit.
The problem is that the slump in the semiconductor industry is highly likely to continue. There are even observations that the entire semiconductor division of Samsung Electronics could turn into a deficit during the first half of this year due to a sharp demand shock. In a recent report, Daishin Securities predicted that Samsung Electronics’ semiconductor division would post losses of 69.5 billion won in the first quarter and 67.4 billion won in the second quarter. The last time Samsung Electronics’ semiconductor business recorded a loss was in the first quarter of 2009 (loss of 705.2 billion won).
There is also an analysis that Samsung Electronics may start to cut production. Until now, Samsung Electronics has maintained its position that there is no artificial production cut. Hi Investment & Securities predicted, “The worst semiconductor industry conditions in history will last until the end of the second quarter or the beginning of the third quarter.” did.
It is unclear when the market will improve. The industry expects the atmosphere to gradually reverse from the third quarter of this year at the earliest. KBSecurities said, “The memory slump is expected to continue until the second quarter of 2023. Memory inventory is expected to peak in the second quarter.” We expect this to improve,” he said. Hana Financial Investment also predicted, “It is difficult to improve performance in the first half, but it will be possible in the second half.”
Meanwhile , LG Electronics also received a gloomy report card. LG Electronics’ operating profit in the fourth quarter of last year was 65.5 billion won, a 91.2% decrease compared to the same period in 2021. However, it recorded 21,859.7 billion won in sales in the fourth quarter, succeeding in entering the 80 trillion won range for the first time in history.