Earnings outlook for the Korean Inc. led by Samsung Electronics who on Thursday estimated about 1 percent on-quarter drop in its performance for the second quarter has darkened on slowed global economy stricken by strong inflation and supply bottleneck.

According to financial market tracker FnGuide on Wednesday, brokerage most cut this year’s earnings outlook for display and electronic components manufacturers for this year on negative developments.

They estimate combined income of 753.7 billion won from the segment, revised 29 percent downward from 1.07 trillion won estimated a month earlier. They also shaved outlook for shipbuilding sector by 28.68 percent, mobile phone and related components 6.98 percent, chips and related components 6.12 percent, and games 3.57 percent.

OLED panel prices have been softening, and display exports fell for the first time in 22 months last month.

LG Display, dominant OLED vendor, is projected to report a 75 percent plunge in its operating income for this year.

“It is hard to find upside for the stocks in the category,” said Kim Hyun-soo, a researcher at Hana Securities.

IT segment is expected to be hard-hit by growing pessimism on global economy.

According to Hyundai Motor Securities, global smartphone shipment in the second quarter is projected to have declined 11.4 percent on year to 294 million units. Smartphone demand is expected to decline 6.3 percent for the full year.

Chip contract prices have been stagnated, wiping out the upside for Samsung Electronics and SK hynix stock prices hovering at 52-week lows.

The outlook on shipbuilding and game sectors also remains gloomy. The number of new shipbuilding orders in the first 6 months of the year fell 30 percent from a year ago. Korean shipbuilders have seen an increasing number of pricy orders of large-size LNG carriers but rising raw materials cost such as of thick steel plates weigh over profitability.

Major shipbuilders including Korea Shipbuilding & Offshore Engineering, Daewoo Shipbuilding & Marine Engineering, Hyundai Heavy Industries, and Samsung Heavy Industries are all projected to reporter losses widened from estimates of last month.

Game publishers lack clear momentum for new releases. Spending growth on global mobile games has been slowing due to weak Chinese market. Game stocks have also been an issue for increased valuation burden due to sharp stock price surge last year.

The outlook for Korean refiners remains bright.

The second quarter operating income estimate for S-Oil has jumped 16 percent from a month ago and 57 percent from three months ago. The forecast for its annual operating income for this year also jumped 10 percent.

Brokerages expect refining margin to benefit from strong oil prices and supply shortage throughout the year.

The gloomy earnings outlook is leading to worsened cash flow at Korean Inc.

According to FnGuide, total cash flows from operating activities in the second quarter of 1,883 listed companies were estimated at 39.07 trillion won, down 41 percent from 65.9 trillion won a year ago. Samsung Electronics is also estimated to report a 24 percent fall in its operating cash flows in the second quarter.

The weakening won against the U.S. dollar that has plunged to 1,300 won level dampens the bottom line due to jump in dollar-denominated debt.

By Cha Chang-hee, Kang Min-woo, and Lee Eun-joo

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