By Kim Yoo-chul
Staff reporter
Two top electronics component-making affiliates are extending their winning streaks in quarterly earnings, helped by the rising demand for consumer electronics products amid signs of an apparent global economic recovery.
Stock analysts say the coming third and fourth quarters will be even better for Samsung SDI and LG Innotek, which mainly produce batteries and light-emitting diode (LED) chips, respectively.
On Tuesday, Samsung SDI said its quarterly operating profit during the April-June period increased year on year by 45.1 percent to reach 83.6 billion won, while sales went up 11.8 percent to 1.327 trillion won. Net profit for the second quarter was up 33.3 percent to 68.4 billion won.
"Strong sales of smartphones and plasma televisions, on the back of major sporting events such as the World Cup, boosted our sales," said company spokesman Seo Hae-su.
Seo said the outlook for the second half looks rosy as the demand for lithium-ion batteries is expected to rise by around 20 percent for the remainder this year, spurred by explosive growth in smartphones.
Samsung SDI is the world's second-biggest rechargeable battery maker supplying batteries to smartphones, tablet PCs and electric cars. It also produces plasma panels and highly-advanced AM OLED screens, used in Samsung Electronics' strategic smartphone models such as Galaxy S.
"The quarterly profit was above the market consensus. Unlike the cyclical memory chip business, the price for rechargeable batteries will remain stable in the latter half, making it likely that SDI will continue its winning streak," said Kang Jeong-won, an analyst at Daishin Securities.
Samsung isn't the only player increasing its quarterly earnings.
LG Innotek has just marked the start of a "1 trillion won quarterly sales era" in the second quarter with the help of balanced performances from its key businesses.
LG Innotek, the LG Group's LED chip-making unit, saw explosive growth in its quarterly operating profit during April-June period by posting 86.1 billion won ― a 103.1 percent surge year-on-year.
Sales for the second quarter spiked by 104.4 percent to 1.03 trillion won. Stock analysts had forecast 980 billion won quarterly sales and 69 billion won in operating profit.
"The market for LED backlights was strong, while the healthy demand for PCB, semiconductors and display backed up," said Innotek spokesman Jung Jae-wook.
Its LED business unit reaped 285.1 billion won quarterly sales ― up 375 percent from a year earlier.
LED chips are the key components for LED-backlit LCD televisions. The global LED chip industry is still facing a tight supply as major television makers are aggressively boosting their portion of LED-backlit LCD TVs to meet rising consumer demand.
Samsung Electronics and LG Electronics are leading the sector, followed by Sony and other second-tier manufacturers.
Jung of LG said demand for LED-backlit LCD TVs and other mobile gadgets that use LED as the main backlight will continue to be strong in the current quarter and added the third quarter will even better.
"LED chip-making companies will see sustainable external corporate growth as LED-embedded consumer products are getting a better reputation," said a high-ranking industry official.