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Samsung, LG post record Q1 earnings

Firms raise highest-ever sales from home appliances biz, benefiting from pent-up demand under persisting pandemic

Samsung's Consumer Electronics President Lee Jae-seung (Samsung Electronics)
Samsung's Consumer Electronics President Lee Jae-seung (Samsung Electronics)

Strong sales of home appliances pushed South Korean electronics firms’ sales to a new quarterly high.

According to first-quarter earnings results released by Samsung Electronics and LG Electronics on Thursday, the tech titans both achieved their highest-ever quarterly sales and operating profits in the first three months of 2021.

Samsung posted record-high sales of 65.39 trillion won ($59 billion) in the first quarter, driven by its mobile device and home appliances businesses, despite the sluggish performance of the semiconductors unit.

The country’s biggest tech company also logged 9.38 trillion won in operating profit, delivering an earnings surprise to the market.

Compared to the same quarter last year, the sales and operating profit jumped 18.19 percent and 45.53 percent, respectively.

The first-quarter sales marked the highest ever in Samsung’s history, the company said. 

LG Objet lineup (LG Electronics)
LG Objet lineup (LG Electronics)

LG also announced record-high sales and operating profit in the first quarter, led by its home appliance and air solution business, H&A.

The company posted 18.81 trillion won in sales and 1.52 trillion won in operating profit, up 27.7 percent and 39.1 percent from a year earlier.

LG’s operating margin reached a new high of 8.1 percent.

LG’s H&A business exceeded the 900 billion-won mark in operating profit for the first time in the company’s history, it said.

“Profitability soared by 39.1 percent, reflecting very strong demand for LG home appliances and home entertainment products as consumers around the world continue to spend more time at home,” LG said in a statement.

The consumer electronics business of Samsung achieved the largest-ever sales and operating profit, contributing to overall growth.

The unit in charge of selling TVs and home appliances posted 12.99 trillion won in sales and 1.12 trillion won in operating profit, the earnings report showed.

In less than two months since its launch, Samsung’s newest QLED TVs sold more than 10,000 units in Korea, leading the sales growth.

Sales of the customizable Bespoke home appliance series continued to rise as the company started selling the products in foreign markets early this year.

Samsung’s mobile business also benefited from a consumer penchant to spend relatively more on new mobile gadgets.

The smartphone business posted 29.1 trillion won in sales and 4.39 trillion won in operating profit, owing to early launches of its flagship Galaxy S and midrange Galaxy A series.

Sales volume of Galaxy S phones surpassed 1 million units in 57 days from the launch.

Financial market forecasts pose that Samsung would have shipped out 75 million to 76 million smartphones in the first quarter.

Samsung’s most lucrative semiconductors unit reported a poorer performance than market expectations.

The device solution business raised 19.1 trillion won in sales and 3.37 trillion won in operating profit, down in operating profit from 3.99 trillion won in the same quarter last year and 3.85 trillion won in the previous quarter.

Despite a favorable performance in the memory market, the chipmaker’s system-on-chip and foundry businesses seem to have made losses.

Due to the Texas power outage that shut down its Austin, Texas, foundry for a month, Samsung’s losses mounted to over 300 billion won, the company said.

The profitability of the chipmaker also worsened due to increased investments in technological migration and purchases of new equipment. 

Samsung Neo QLED TV (Samsung Electronics)
Samsung Neo QLED TV (Samsung Electronics)

Both Samsung and LG expect the current demand trends for consumer electronics to continue throughout the year, while they are set to closely monitor uncertainties and risks stemming from COVID-19.

“In the second quarter, the company expects TV demand to increase year-on-year with major sporting events including the UEFA Euro 2020 and the Summer Olympic Games expected to take place,” Samsung said in its press release. “However, risks persist around COVID-19 as new surges across the globe lead to additional lockdown measures.”

However, the semiconductor and mobile units expect their businesses to still be influenced by the current chip shortage issue across the globe.

“While memory prices have turned around and the trend would continue well into the second half, the company would be affected by the ongoing chip shortages in the fields of PCs and mobile devices,” said an official from the chip unit during a conference call.

”Samsung‘s mobile business also foresees an unfavorable impact of the chip shortage and risks from the COVID-19 pandemic on smartphone sales,“ said a mobile unit official. ”The company is preparing to secure profitability by expanding the foldable phone lineup and introducing new wearable and tablet products.“

By Song Su-hyun (