Mixed expectations as Q2 corporate earnings season kicks off

By Kim Joo-heon Posted : July 8, 2024, 15:29 Updated : July 8, 2024, 15:30
This photo shows Samsung Electronics' office in Seocho, Seoul. Courtesy of Samsung Electronics
SEOUL, July 8 (AJU PRESS) - Korea's second-quarter earnings report season is kicking off with a mixed outlook across sectors. The semiconductor industry shows signs of recovery amid the artificial intelligence boom, while battery makers appear to still be saddled with the lackluster electric vehicle market.

Samsung Electronics issued its preliminary earnings guidance on Friday, significantly surpassing expectations. The tech giant estimated a remarkable 1,452.24 percent year-over-year increase in operating profit, reaching 10.4 trillion won. Revenue is also expected to have surged by 23.31 percent to 74 trillion won during the April-June period.

Industry sources attribute the stellar performance primarily to improvements in the memory chip sector, driven by an increase in the average selling price (ASP) of DRAM and NAND flash memory. According to Sangsangin Investment & Securities analyst Jung Min-gyu, ASPs for DRAM and NAND are estimated to have increased by 17 percent and 18 percent, respectively, compared to the previous quarter.

This increase is attributed to the expansion of high-bandwidth memory (HBM) production capacity, transitions in manufacturing processes, and strategic production adjustments aimed at creating memory supply shortages.

Samsung's strong performance has heightened expectations for SK hynix, a major player in HBM semiconductors. Sangsangin Investment & Securities forecasts an operating profit of 6.178 trillion won, while Hi Investment & Securities predicts 6.136 trillion won. This would be roughly double the 2.886 trillion won operating profit SK hynix achieved in the first quarter.

On Friday, LG Electronics estimated its second-quarter operating profit at 1.196 trillion won, marking a 61.2 percent rise from the previous year. Revenue was projected to have increased by 8.5 percent to 21.709 trillion won.

Hyundai Motor and Kia are expected to maintain their strong performance. Hyundai's second-quarter operating profit is forecast to be 4.259 trillion won, slightly exceeding the previous record of 4.238 trillion won set in the first quarter of 2023. Kia's second-quarter operating profit forecast is 3.815 trillion won, also surpassing the previous record of 3.403 trillion won. Hyundai's revenue is expected to reach 44.191 trillion won, up 4.6 percent compared to last year, and Kia's is 28.219 trillion won, up 7.52 percent.

However, the battery industry is experiencing a downturn due to a slowdown in the electric vehicle market. LG Energy Solution announced Monday that its consolidated operating profit is estimated to be 195.3 billion won, a 57.6 percent decrease from the same period last year. Revenue is forecast to have decreased by 29.8 percent year-on-year to 6.16 trillion won. Samsung SDI's second-quarter operating profit is forecast to reach 402.6 billion won, down 10.56 percent from the previous year.

Petrochemical and steel industries are generally facing challenges due to prolonged market slumps. LG Chem's second-quarter operating profit forecast is 448.7 billion won, down 27.1 percent year-over-year. POSCO Holdings' second-quarter operating profit is forecast to be around 667.6 billion won, about half of the 1.326 trillion won from the same period last year.

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