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Samsung Electronics, one of the world's largest makers of computer memory chips, forecasts consolidated operating profit for the second quarter in a range of 2.2 trillion-2.6 trillion Korean won. In the year-ago quarter, the company had reported an operating profit of 1.89 trillion won and net income of 2.14 trillion won, on a parent basis.
The company, which is also the world's largest manufacturer of liquid crystal displays and flat-screen televisions and is currently ranked second only to Nokia Corp. (NOK | Quote | Chart | News | PowerRating) in the production of mobile phones, projects consolidated sales for the second quarter in a range of 31 trillion-33 trillion won. In the year-ago period, the company reported revenue of 29.10 trillion won.
In a filing with the Korean stock exchange, the company said, "Samsung expects that providing earnings guidance would help not only minimize speculation in the market but also help enhance company transparency and provide investors with a more accurate expectation of the earnings."
Samsung has been reporting poor earnings results for the preceding few quarters. The weak economic conditions around the world led to a general drop in demand for electronics items as consumers restricted spending to necessities. Added to this was the oversupply of chips in the market, which resulted in lowering of prices.
In April, Samsung had reported a 72% drop in profit for the preceding first quarter to 619.2 billion won, hurt by lower demand for memory chips and LCD screens, despite strong double-digit growth in Digital Media & Communication sales. On a consolidated basis, including affiliates, total sales for the quarter increased 10.2% from the prior-year period to 28.67 trillion won, but fell from the preceding fourth quarter's 33.00 trillion won.
Consolidated operating profit for the first quarter plunged to 0.47 trillion won from 2.57 trillion won in the same period last year, and operating profit on a parent basis fell 93% from a year ago to 147.6 billion won. At that time, the company had said it expects LCD market demand to increase in the second quarter and also forecast a flat or marginal sequential increase in the telecommunication handset market.
In January, Samsung reported a net loss for the fourth quarter of 0.02 trillion won, compared to net income of 2.21 trillion won in the year-ago quarter, hurt by poor results at its semiconductor and liquid crystal display divisions. The loss, which came despite an increase in sales, was the company's first-ever quarterly loss. Total sales for the quarter increased to 18.45 trillion won from 17.48 trillion won in the same period of the previous year.
Samsung's peer South Korean consumer electronics and mobile communications company LG Electronics (LGERF.PK) in April reported a net loss for the first quarter of 198 billion won, or US$141 million, compared to net profit of 422 billion won in the prior-year period. Consolidated sales for the quarter, including affiliates, rose 10.7% from the same period last year to 15.89 trillion won or US$11.28 billion. Moving ahead, LG Electronics said it expects sales for the second quarter to expand over 10% quarter-over-quarter, with the start of the high season for air conditioners and introduction of new products in major categories.
In May, Japanese consumer electronics giant Sony Corp. (SNE | Quote | Chart | News | PowerRating) reported a net loss for the fourth quarter of 165.14 billion yen, or US$1.69 billion, hurt by deteriorating demand, restructuring activities, the appreciation of the yen and the decline in the Nikkei. Looking ahead to fiscal 2010, Sony had said it anticipates reporting a loss attributable to company shareholders of 120 billion yen, on sales and operating revenue of 7.3 trillion yen.
SSNLF.PK last traded at $440.92 on July 1. On the Korean stock Exchange, Samsung Electronics is currently trading at 627,000 won, up 4.33% on a volume of 0.48 million shares.
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