Even amid an unprecedented global pandemic, South Korea’s flagship company continues to generate cash by the truckload, with Samsung Electronics on Tuesday anticipating a 23% rise in operating profit, year-on-year.
The electronics behemoth, which enjoyed a 3.4% rise in operating profit in Q1, projects its operating profit for the second quarter to come in at 8.1 trillion won, or US$6.8 billion, in an earnings guidance released to media.
Even so, revenues are expected to drop 7%, to $43.6 billion.
Samsung’s Tuesday guidance precedes its official Q2 disclosure later this month.
One factor behind the impressive data is a low year-on-year base effect, and 2019 was the trough of the semiconductor supercycle.
Even so, the company appears to have ridden the current peak handily, with an additional boost supplied by rising chip demand for personal computers and servers, as well as for TVs and devices, in a world imprisoned in lockdown in 2020’s Q2.
Overall, the company looks well-positioned in the mid-term, despite soaring competition from Chinese players and the colossal uncertainties of a potential decoupling of Chinese and US supply chains.
Samsung maintains a broad, cross-sector balance in the electronics industry between components – notably chips and displays – and devices. The company’s “memory-chip business is likely to benefit from strong datacenter and game-console demand, partly offset by its relatively weaker consumer electronics and display-panel businesses,” Fitch Ratings wrote in a report on July 3.
Moreover, its “credit profile remains supported over the long-term by its technology leadership, robust market position and a diversified business portfolio that mitigates cash-flow fluctuation, particularly from the cyclical semiconductor and display-panel segments,” Fitch added.