Tuesday 8 January 2019 1:21 pm

LG profits to plummet 80 per cent in festive quarter, as Samsung shares hit by weak chip demand

LG Electronics has said its operating profit for the fourth quarter is likely to drop 80 per cent from the same period in 2017, falling miles away from previous analyst expectations.

The world's second largest TV manufacturer has forecasted profit of just 75.3bn won (£52.5m) for the three months to December last year, which is also an 80 per cent drop from analyst estimates of 387bn won by Refinitiv. LG pulled in 336.8bn won in the fourth quarter of 2017.

Revenue is likely to have fallen seven per cent to 15.8 trillion won, versus estimates of 16.3 trillion won.

The news comes hours after its rival and fellow South Korean firm Samsung Electronics said it predicted a 29 per cent drop in profit for the fourth quarter, blaming weak demand for chips and phones as China's trade war with the US hits the smartphone market.

Weaker earnings for smartphone and semiconductor manufacturers will add to existing pressure on the nerves of investors, after Apple cut its quarterly revenue forecast for the same quarter last week for similar reasons.

Samsung's share price dipped 1.68 per cent by market close this morning, while LG fell 3.58 per cent.

Samsung has estimated operating profits of 10.8 trillion won for the October to December quarter, missing the 13.2 trillion won average analyst estimate by Refinitiv. Revenue is likely to have fallen 11 per cent to 59 trillion won.

In an unusual turn of events, Samsung also issued a commentary alongside its results filing, its first since late 2014. It said weaker-than-expected demand from data centre customers adjusting their inventories drove down chip prices, and hurt its earnings in the face of rising uncertainty.

Samsung also said a "stagnant and fiercely competitive smartphone market" weighed heavily on its income. The firm intends to continue to innovate its product line, such as with foldable screens in handsets and 5G-capable smartphones.

 

 

 

Share


Tags: