Samsung Profits Down LG Electronics Up As COVID-19 Has Impact
The two big South Korean tech giants Samsung and LG Electronics have both released their latest financials, While Samsung has reported a 26.7% fall in profits, LG has surprised the market with a 31.3% jump in profits over the same period in 2019, this was a record for the Company who is taking advantage of supply issues and COVID-19 lockdowns to generate profits.
Samsung Electronics reported operating profits fell 26.7% sequentially to US$8.08 billion in the fourth quarter of 2020, due to weaker memory prices, sluggish consumer products sales and higher marketing costs.
LG Electronics revenue was up 1.53% to US$ 56.45 billion from 2019.
The LG result revealed that Q4 2020 revenue was US$ 16.76 billion reflecting a massive jump of 16.9 percent from its corresponding performance in Q4 2019.
The increased revenue figures of 2020 yielded an operating profit of US$ 2.85 billion, an increase of 31.1 percent from 2019, and this is a new record for the company.
The record-setting performance was mainly driven by higher sales of appliances and OLED TVs in addition to a strong showing in automotive component supply.
The operating profit for Q4 2020 was US$ 580.19 million, ramping up 538.7 percent from 2019.
LG projects that 2021 will see a normalization of the global economy as vaccines are now coming on board across the world to cope with the COVID-19 pandemic.
LG’s Mobile Communications reported revenue of US$ 4.66 billion for the full year 2020, while Q4 sales grew 4.9 percent to US$ 1.24 billion) from 2019, this was 9.2% lower than Q3 2020.
The division reported losses US$ 750.63 million, reflecting increased marketing investments to support sluggish sales of flagship models, partially offset by manufacturing efficiencies.
Samsung’s operating profits rose 26.4% on year in the fourth quarter of 2020, led by display and memory chip businesses, the company said.
Profits for 2020 came to KRW35.99 trillion, when revenue reached KRW236.81 trillion.
Samsung indicated earnings generated by its memory business declined on quarter in fourth-quarter 2020 despite solid shipments, weighed down by a continued decline in chip prices, the won’s strength, and initial costs from new production lines.
Samsung’s mobile communications division reported a profit drop in the fourth quarter 2020, due to weaker sales and higher marketing spending.
The Company said that the results were in line with its earnings a year earlier, supported by continued efforts to optimize costs.
The consumer electronics division also reported a profit decrease on quarter as increased costs outweighed stronger year-end sales in developed markets such as Australia.
Despite the launch of the new Samsung Galaxy S21 the South Korean Company expects overall profits to weaken in the first quarter of 2021.
The Company is hoping for robust sales of flagship smartphones such as the Galaxy S21 and new mass market models which are set to hit retailers in Australia in the first and second quarters.
The consumer electronics division will most likely post stable results despite weakness in seasonal demand, underpinned by new product launches and introduction of new premium lineup’s claims Company officials.
For full-year 2021, Samsung expects a recovery in overall global demand, but uncertainties persist over the possibility of recurring COVID-19 waves.
The Company is banking on new quantum-dot (QD) display products in large-size panels to boost their TV sales as they go head-to-head with brands such as LG who are struggling to position their new Mini LED TV’s Vs their OLED TV’s.
The company said that they plan to increase sales of flagship, foldable and new mass-market 5G models which will be launched in Australia shortly.
In addition, Samsung disclosed capital expenditure in 2020 reached a total of KRW38.5 trillion, including KRW32.9 trillion spent on semiconductors and KRW3.9 trillion on displays.