(updated with LG Electronics earnings)

South Korea’s household electronics names Samsung and LG underperformed expectations for the past quarter ended September as they faced slowed demand in the global economy grappling with post-pandemic runaway inflation and energy crisis.

Samsung Electronics on Friday reported a double-digit dip in operating income for the July-September period against the previous quarter and a year ago due to falling mainstay chip prices from inventory buildup amid subdued global demand in IT components to finished electronics.

LG Electronics, the world’s biggest white goods maker, delivered a drop in operating income despite record sales as spike in commodity prices and softened demand for premium TVs and electronics overwhelmed benefit from a stronger U.S. dollar versus the local won.

Samsung Electronics, the world’s top supplier of chips, smartphones, and electronics appliances in earnings guidance for the third quarter estimated an operating profit of 10.8 trillion won ($7.6 billion), off 23.4 percent on quarter and 31.7 percent on year.

The estimated income falls sharply below the market consensus of 11.8 trillion won and would be the smallest since the first quarter of 2021.

Profit has fallen against a year-ago period for the first time since the fourth quarter of 2019 amid last down cycle in chips.

Sales came to 76 trillion won, down 1.55 percent on quarter and up 2.7 percent on year to miss consensus of 78.4 trillion won.

Shares of Samsung Electronics ended Friday 0.2 percent down at 56,200 won.

The company will detail performance by division when it reveals the final figure on Oct. 27.

Brokerages estimate profit from chip operation in the third quarter to have fallen by around 30 percent from 9.98 trillion won in the second quarter to come under 7 trillion won.

According to market tracker TrendForce, spot prices of DRAM fell 10 to 15 percent on quarter in the third quarter, and NAND flash memory about 13 to 18 percent.

Foundry, smartphone, and display operation would have benefited from higher dollar-won exchange rate, while TV sets and other high-end home appliances would have been affected by slowed global economy from strong inflation.

Samsung Electronics is widely expected to face tougher fourth quarter.

LG Electronics in its earnings guidance for July-September estimated an operating income of 746.6 billion won, off 5.8 percent on quarter, but up 25 percent on year. The company had booked 480 billion won in loss reserve in the third quarter last year for battery recall for General Motors vehicles.

Sales added 8.8 percent on quarter and 14 percent on year to a fresh record of 21.17 trillion won.

Sales exceeded estimate of 19.9 trillion won while income fell below consensus of 835.5 billion won.

Cumulative profit as of September this year rose 5.1 percent to 3.48 trillion won on sales of 61.6 trillion won, up 15.9 percent. The company also expects further deterioration in the fourth quarter due to tepid demand in TV sales.

Shares of LG Electronics ended up 1.4 percent at 81,700 won.

By Hye-seung Seo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]