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Samsung Electronics announced Thursday it had recorded 65 trillion won (US$58.1 billion) in sales and 9.3 trillion won (US$8.31 billion) in operating profit in Q1 2021. (Yonhap News)

Despite initial concerns voiced by some market observers, Samsung Electronics kicked off the business year with an earnings surprise in the first quarter (Q1). In the same quarter, LG Electronics posted its highest revenue and profit since its establishment.

Analysts believe that Samsung and LG have benefited from increasing spending on home appliances as the protracted COVID-19 pandemic keeps more people at home and as pent-up demand drives a rapid recovery.

Samsung Electronics announced Wednesday it had recorded 65 trillion won (US$58.1 billion) in sales and 9.3 trillion won (US$8.31 billion) in operating profit in Q1 2021 (January through March) on a consolidated basis. Sales were up 5.61% and profit by 2.76% from Q4 2020.

While Samsung is still tallying the precise figures, it released these provisional figures for the convenience of investors. It plans to publish the official earnings around the end of April along with detailed figures for each business division.

Experts say that the underperformance of Samsung’s semiconductor division was offset by smartphones, TVs, and home appliances, which have seen more “revenge spending” driven by COVID-19.

Samsung’s mobile division, which is responsible for smartphones, is expected to record around 4.3 trillion won (US$3.85 billion) in operating profits, which appears to have buoyed the company’s overall quarterly performance. The company has seen brisk sales both of models in its mid-range Galaxy A series and its flagship Galaxy S21, which was released in January, ahead of its original launch date in March.

Samsung’s Consumer Electronics division, which includes televisions and home appliances, has also enjoyed strong sales, and security analysts expect the division will approach 1 trillion won (US$894.27 million) in operating profit.

In contrast, operating profit in Samsung’s semiconductor division is expected to only reach 3.5-3.6 trillion won (US$3.13-3.22 billion) in Q1 because of spending on assembly lines and because operations were halted at a factory in Austin, Texas, during a cold wave and resulting power outages in the state.

Analysts think that Samsung’s earnings in Q2, unlike Q1, will be boosted by semiconductors and memory chips in particular. Rising DRAM prices will become evident in Q2 and prices of NAND flash memory will shift in an upward direction.

In Q1, LG Electronics posted its highest-ever quarterly sales and earnings figures, with revenue of 18.81 trillion won (US$16.82 billion) and operating profit of 1.52 trillion won (US$1.36 billion).

Its operating profit, in particular, was much higher than the market consensus of a little over 1 trillion won. LG bested its 12-year-old record of 1.24 trillion won (US$1.11 billion), set in Q2 2009, by nearly 300 billion won (US$268.12 million).

LG also slightly exceeded its previous record for revenue, set the previous quarter, in Q4 2020, at 18.78 trillion won (US$16.79 billion). LG’s revenue was up 27.7% and its operating profit was up 39.2% compared to Q1 2020.

Despite LG’s losses in the mobile division, which it will be closing at the end of July, the company’s sales of home appliances and TVs drove earnings to new heights, backed by the pent-up demand of people stuck at home during the pandemic.

Securities analysts say that LG’s home appliance division will have topped 6 trillion won (US$5.36 billion) in revenue and 8 billion won (US$715.17 million) in operating profit for the first time. The increasing sales have been driven by the continuing popularity of new appliances, including LG’s steam dryer, the launch of a new air conditioner, and strong sales of the Objet Collection, a line of appliances whose colors and materials can be tailored to one’s home décor.

Analysts expect a 30% year-on-year increase in Q1 revenue in LG’s home entertainment division, which is in charge of televisions, thanks to higher sales of premium products, including OLED and NanoCell televisions.

Despite LG’s record-setting earnings, its mobile communication division is estimated to have racked up losses of more than 200 billion won (US$178.87 million) in Q1 2021.

The company plans to release its net profit and the earnings for each business division, calculated on a consolidated basis, at the end of April.

By Cho Kye-wan, staff reporter

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