Seoul (AFP)
South Korea's two largest electronics groups, Samsung Electronics and LG, said on Wednesday they expected a 40% jump in operating profit in the first quarter, as global demand was boosted by pandemic-induced teleworking.
Samsung Electronics said it expects a 44.2% increase in operating profit between January and March, largely due to strong smartphone sales and the launch of its new range, the Galaxy S21.
The profit is expected to be 9.3 trillion won ($ 8.3 billion), the South Korean giant, the world's largest maker of memory chips, said in a statement.
For its part, LG Electronics, the second South Korean manufacturer of household appliances after Samsung, forecasts a 39.2% increase in operating profit over the same period to 1.5 trillion won.
"Quarterly revenue and operating profit are the highest in company history," LG said in a statement.
Samsung's figures are well above analysts' expectations, Gloria Tsuen of Moody's Investors Service told AFP, explaining that "tight stocks in semiconductors, especially DRAMs," had helped to the performance of the group.
The analyst consensus was in the order of 8.880 billion won, according to Bloomberg News.
- Economic boom -
Samsung Electronics is the flagship of the Samsung group, which is by far the largest of the family conglomerates - the "chaebols" - which dominate the 12th largest economy in the world.
The good health of the group is crucial for that of the South Korean economy since it alone represents 20% of the national GDP.
The coronavirus has wreaked havoc around the world amid lockdowns and travel restrictions.
But the pandemic, which has claimed more than 2.8 million lives, has also sparked an economic boom for many tech companies.
The global trend towards telecommuting has led to an explosion in demand for hardware powered by Samsung chips, as well as televisions, washing machines and other household appliances.
Samsung Electronics' first quarter revenue is expected to be up 17.5% year on year to 65 trillion won.
Experts agree that the result was boosted by the release of its Galaxy S21 range in January, more than a month ahead of its usual launch schedule.
"One of the keys to this success has been its lower starting price, at $ 799," indicates a study by the specialist firm Counterpoint Research.
Samsung shares, however, did not benefit from these positive announcements, ending with a small decline of 0.47% on the Seoul Stock Exchange on Wednesday.
That of LG Electronics also fell by 0.94%, while the group has just announced that it was giving up its smartphone business, which had been in deficit for many years.
- Incarcerated heir -
The semiconductor industry as a whole expects record revenue from telecommuting this year, according to Taipei-based firm TrendForce.
However, Samsung had to contend with the shutdown of semiconductor factories in Texas in February due to power outages caused by a severe winter storm.
The group said production was almost back to normal by the end of March, but South Korea's Yonhap agency said the setback could cost Samsung Electronics 400 billion won in losses.
However, the performance of Samsung in the first quarter was supported according to Hi Investment and Securities by its smartphone division.
The group is expected to have produced around 62 million smartphones in the first quarter, and claim an 18.1% market share, according to TrendForce.
If these estimates hold true, Samsung should regain the lead in the global ranking of smartphone vendors, a place it ceded to Apple in the last quarter of 2020.
Despite its commercial successes, the group has to deal with the setbacks of its heir Lee Jae-yong, who is officially the vice-president of Samsung Electronics but is de facto the boss.
After a long legal process that Samsung dragged like a ball, and at the end of a new trial, the grandson of the founder of the group was sentenced in January to two and a half years in prison for corruption and embezzlement in the resounding scandal that precipitated the impeachment in 2017 and the incarceration of former South Korean President Park Geun-hye.
He gave up on appeal, which could allow his early release.
In the meantime, his incarceration could, according to experts, hamper the group's decision-making process.
© 2021 AFP