With the onset of the first quarter earnings season, recent brokerage firms have been raising their earnings forecasts for major domestic electronics and component corporations. In the case of SK hynix, where an initial operating profit consensus of around 6 trillion won was formed, forecasts indicate that it will achieve an operating profit of over 7 trillion won. This marks the highest quarterly performance in history.
Earnings estimates for corporations such as LG Display, which was expected to be in the red, as well as Samsung Electro-Mechanics and LG Innotek are also on the rise. Samsung Electronics announced better-than-expected provisional results for the first quarter due to a pull-in effect related to tariffs, but losses are anticipated in the semiconductor sector. The memory division reported an operating profit in the 3 trillion won range, but the growing losses in the non-memory division have been seen as a drawback.
◇ Effect of 'pull-in' against tariffs… Samsung semiconductors hindered by non-memory decline
According to industry sources on the 23rd, the first quarter earnings of major domestic electronics and components corporations, starting with LG Innotek, are set to be announced. SK hynix is estimated to have recorded over 17 trillion won in sales and an operating profit exceeding 7 trillion won in the first quarter. Financial data provider FnGuide initially expected SK hynix's first quarter operating profit consensus to be 6.6 trillion won, but it has recently adjusted its outlook upwards.
The better than expected performance of SK hynix can be attributed to the demand from major clients looking to stockpile in anticipation of tariffs imposed by Trump, as well as the continuously increasing share of highly profitable high-bandwidth memory (HBM) products. Notably, the 5th generation HBM (HBM3E) 12-layer product line recorded the highest market share, enhancing profitability.
SK hynix recorded sales of 12.4296 trillion won and an operating profit of 2.886 trillion won in the first quarter of last year, indicating an increase of about 40% in sales and over 140% in operating profit compared to a year ago. This also surpasses the previous highest operating profit of 4.3673 trillion won recorded in the first quarter of 2018.
In contrast, Samsung Electronics reported a provisional operating profit of 6.6 trillion won for the first quarter. Brokerage firms estimate that the memory division of Samsung Electronics likely achieved an operating profit around 3 trillion won in the first quarter. However, the expanded losses in the foundry and system LSI sectors are expected to result in an overall operating loss of around 300 billion won in the semiconductor division.
◇ Expectations for profit turnaround by LGD… Samsung Electro-Mechanics and LG Innotek also perform well
Earnings forecasts for component suppliers are also on the rise. In the case of LG Innotek, an estimated operating profit forecast of around 80 billion won was set last month, but LG Innotek announced an operating profit of 125.1 billion won, significantly exceeding expectations. Sales reached 4.9828 trillion won, achieving the highest sales in history for the first quarter. The recent increase in exchange rates and the effect of supplying all front and rear camera modules for the iPhone 16e have been credited for its strong performance even during the off-season.
Samsung Electro-Mechanics is also expected to see an increase in both sales and operating profit in the first quarter of this year compared to the previous year. Brokerages project that Samsung Electro-Mechanics will achieve sales of about 2.7 trillion won and an operating profit of around 200 billion won in the first quarter. This represents increases of approximately 2% and 10% respectively compared to the previous year. Notably, the operating profit, which fell to the 100 billion won level last year, is expected to rise back to the 200 billion won level this quarter.
Display corporations are also expected to show generally robust results. According to FnGuide, the first quarter consensus for LG Display's performance is projected at 6.1455 trillion won in sales and an operating loss of 890 billion won. Compared to the same period last year, sales increased by 17% and the deficit decreased by 81%. However, most of the forecasts released in the past two to three weeks predict a profit turnaround, indicating a rising trend in expectations for operating profits.