Samsung Electronics Earnings Outlook Lowered by 11 Trillion Won Due to Record Performance Bonuses

Securities firms are consecutively lowering their earnings expectations for Samsung Electronics.

Observations suggest that the improvement in performance will fall short of market expectations as the provision for performance bonuses is being reflected more significantly than anticipated.

In a report released today (June 29), Kiwoom Securities projected that Samsung Electronics' second-quarter earnings would miss market estimates.

While the firm analyzed that prices for general-purpose DRAM and NAND rose by 58% and 75% respectively compared to the previous quarter, slightly exceeding initial expectations, it also determined that the amount of provisions set aside for performance bonus payouts would be larger than expected.

The firm projected revenue of 183 trillion won, up 36% from the previous quarter, and an operating profit of 89 trillion won, an increase of 56%.

This figure is significantly lower than the previously issued operating profit forecast of 100 trillion won.

Hyundai Motor Securities also lowered its second-quarter operating profit estimate for Samsung Electronics to 81.3 trillion won, a 12.2% decrease from its previous projection.

The revenue estimate was maintained at 179.7 trillion won, the same as the previous forecast.

However, the prevailing view is that even if the second-quarter operating profit falls short of market expectations, the impact on the stock price will not be significant.

The reasoning is that it is merely a matter of the timing of reflecting the provisions, not a deterioration of the actual performance.

Nevertheless, caution is advised regarding the possibility of increased short-term volatility.

In particular, the report predicted that stock price volatility could increase in the second half of the year as the momentum for expanding market share in High Bandwidth Memory (HBM) and enterprise Solid State Drives (eSSD) clashes with concerns over the rising market share of Chinese memory manufacturers.

Today, Samsung Electronics closed at 323,000 won, down 4.86% from the previous trading day.

Securities firms diagnosed that earnings would return to a normal trajectory starting in the third quarter, when the burden of provisions is resolved.

Kiwoom Securities predicted that Samsung Electronics' third-quarter revenue of 206 trillion won and operating profit of 114 trillion won would increase by 13% and 28%, respectively, compared to the previous quarter.

The report analyzed, "Micron's operating profit margin has begun to exceed 80%, and the second-quarter operating profit margin forecast for Japan's Kioxia also reaches 74.3%."

It then offered a positive outlook, stating, "The bottleneck in memory semiconductors is resulting in a sharp rise in profitability for related companies."

Reported by Kim Minjeong | Video by JISOO | Graphics by Lee Soo-min | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.