By Kim Tae-gyu
Staff Reporter
Clouds gathering over Samsung Electronics, the country's foremost chaebol by any measure, are unlikely to clear in the near future with concerns of a worst-case scenario lingering.
According to financial data provider FNGuide Sunday, the nation's 26 brokerages predicted that Samsung's 2009 annual sales will contract to 71.3 trillion won from last year's 73 trillion won.
``Samsung will not be immune to the global financial distress. The chances are that its annual sales will shrink,'' Woori Securities analyst Young Park said.
``The worst expectations are widely spread in the market because the circumstances are so uncertain. In particular, the overly volatile foreign exchange rate may cause a headache,'' he said.
The Korean currency started the year at around 1,300 won per dollar but depreciated substantially to break through the psychologically important 1,500 won level last week.
The won-dollar exchange rate seriously affects Samsung's businesses, which comprises semiconductors, liquid crystal display (LCD) products and cell phones, as exports make more than 85 percent of its sales.
The 71.3 trillion won consensus is based on the assumption that the Suwon, Gyeonggi Province-based firm will turn to profits during the third quarter thanks to a price recovery in memory chips and flat-panel displays.
However, it is by no means difficult to find experts with far gloomier projections that the 2009 turnover may contract by double digits if the third-quarter recovery assumption collapses.
``We expect that Samsung sales will plunge 18.8 percent to 59.2 trillion won because demand for LCD and memory chips is likely to go down by more than 20 percent,'' LIG Investment & Securities economist Choi Seung-hun said.
``I am thinking of slightly revising the figures upward but my belief remains unshaken that Samsung sales will contract by more than 10 percent,'' he said.
Eugene Securities also projected Samsung will chalk up sales of 63.7 trillion won, down 12.7 percent from last year.
Choi guessed that a host of overseas brokerages, which have not revealed data, would have similar estimates on Samsung's performance this year.
However, Samsung will not experience a lack of cash because the firm has built up a war chest of 6.7 trillion won as of the end of last year.
``Under the worst-case scenario, Samsung Electronics might face multi-billion dollar deficits this year. Even in this case, it has enough cash on hand to handle it,'' KB Securities analyst An Seong-ho said.
``In an emergency, the firm can use its treasury shares worth upside of 10 trillion won or just cut down on its huge facility investment. It would be one of the last firms in the world to fold,'' he said.
Despite Samsung's rich war chest, some experts point out that Samsung's employees, in particular rank-and-file ones, should do away with complacency.
In time with the unprecedented financial tsunami, Samsung came up with several contingency measures such as cost-cutting efforts and downsizing schemes.
Yet, those who frequently make contracts with Samsung claim that some of its employees still lack a sense of urgency.
``Samsung management seems very busy streamlining the outfit to survive and thrive in the middle of the economic turmoil,'' said a business partner of Samsung.
``But many of its employees seem to believe that nothing will happen to the company, the world's top maker of memory chips and flat-panel displays. That is really dangerous for Samsung,'' he said.