Samsung forecast to log lower Q2 profit on weak panels, TVs

Samsung Electronics Co. will likely report lower-than-expected earnings for the second quarter, hit by flagging demand for TVs and slumping display prices, analysts said Wednesday.

Samsung, Asia’s largest maker of smartphones, TVs, chips and display panels, is estimated to have earned 3.35 trillion won ($3.14 billion) in the April-June period, compared with 4.28 trillion won a year earlier, according to the median estimate of 20 analysts polled by Yonhap Infomax, the financial news arm of the Yonhap news agency.

The median forecast of Samsung’s second-quarter sales stood at 40.25 trillion won, up 6.2 percent from one year ago, while its operating profit was estimated at 3.61 trillion won, a 27.9 percent decline.

Samsung will be the first among global technology companies to report their second-quarter earnings guidance on Thursday amid looming concerns that weak consumer spending in developed economies will continue to squeeze global chipmakers and display makers.

Financial results for each of Samsung’s divisions and earnings forecasts will be announced later this month.

Analysts said that Samsung’s liquid crystal display panel division likely lost money for a second straight month, as TV sales remain sluggish in Europe and the United States, erasing forecast-beating results for Samsung’s mobile business.

“The semiconductor and display sectors fell short of our expectations but mobile phones have outdone market forecasts,” Lee Ka-keun, an analyst at Hana Daetoo Securities Co., said. He estimated that the operating loss of Samsung’s display division amounted to 240 billion won.

Prices of LCD panels for TVs held steady in July, extending a weak streak for nearly two years, according to DisplaySearch, which releases panel prices twice a month. Mobile panel prices inched down this month from about two weeks ago, it added.

Last week, Samsung combined its semiconductor and LCD panel divisions and sacked its LCD chief in a bid to accelerate the revival of its display business under a single leadership. Kwon Oh-hyun, president of Samsung’s semiconductor division, began to double as the company’s chief of LCD business.

Samsung’s mobile business was the single bright spot in the second quarter thanks to positive market response to the company’s latest Android smartphone, the Galaxy S2.

“Samsung is forecast to have shipped more than 30 million units of smartphones in the first half of this year, more than half of its annual sales target,” said Kang Jeong-won, an analyst at Daishin Securities Co. “It is possible that Samsung will raise its annual smartphone target.”

Samsung, the world’s second-largest maker of mobile phones and the fastest growing smartphone maker, aimed to double its smartphone sales from 2010 to about 60 million, its mobile head Shin Jong-kyun said earlier this year. 
(Yonhap News)