Samsung Electronics and LG Electronics will release their preliminary results for the second quarter on the 7th. Both are expected to post solid results, but their core TV and home appliance businesses are still forecast to remain sluggish. Thanks to a supercycle in memory semiconductors driven by an unprecedented boom, Samsung Electronics is expected to post record-high profit, but the operating margin of its video display (VD) and digital appliances (DA) units is projected to be in the 0% range. LG Electronics is expected to see profit improve on the back of U.S. tariff refunds, but excluding that effect, home appliance and TV profitability is expected to remain limited even in the traditional peak season.
According to the consensus compiled by FnGuide on the 6th, Samsung Electronics' second-quarter sales are expected to be 172.6778 trillion won and operating profit 84.5994 trillion won. Securities firms analyze that, year over year, sales will rise 131.6% and operating profit 1,709.2%. Compared with the previous quarter, sales would be up 29.0% and operating profit 47.9%. The largest quarterly sales and operating profit in the history of Korea's corporations were Samsung Electronics' records in the first quarter (sales 133.87 trillion won and operating profit 57 trillion won), which would be broken again after just one quarter.
LG Electronics is projected to post sales of 22.5443 trillion won and operating profit of 1.058 trillion won. Those would be up 8.7% and 65.5%, respectively, from a year earlier. However, compared with the previous quarter, sales would fall 4.9% and operating profit 36.8%. In the previous quarter, LG Electronics reported its highest-ever first-quarter sales and the third-largest first-quarter operating profit. The second-quarter consensus does not surpass those records, but if tariff refunds are reflected, quarterly profit could return to the top tier, analysts said.
The backdrop for Samsung Electronics' second-quarter growth is cited as a memory semiconductor supercycle fueled by increased investment in artificial intelligence (AI) servers. LG Electronics is expected to see profit grow as one-off revenue from U.S. tariff refunds is reflected. However, such improvement does not mean a structural recovery in TVs and home appliances.
Samsung Electronics' second-quarter operating margin for VD and DA is estimated at 0.2%. For LG Electronics, excluding the tariff refund (estimated at about 300 billion won), operating profit would drop to around 758 billion won. That would be more than a halving from the previous quarter.
Behind the deteriorating profitability of both companies' TV and home appliance businesses are slowing global consumption, low-cost offensives by Chinese brands, and rising component costs. As in the past, simply boosting sales of refrigerators, washing machines, air conditioners, and TVs no longer secures margins. Samsung Electronics and LG Electronics are responding by growing new revenue sources such as advertising, subscriptions, heating, ventilation and air conditioning (HVAC), data center cooling, and robots. Analysts say the future trajectory of results will depend on how quickly these new businesses can make up for the lower profitability of legacy TVs and home appliances.
◇ Samsung Electronics, semiconductors drive most of the profit
DB Securities forecast Samsung Electronics' second-quarter sales and operating profit at 166.4 trillion won and 83.7 trillion won, respectively. Of that, it projected 82.5 trillion won in operating profit from DS (semiconductors). By contrast, it analyzed that VD and DA operating profit might not exceed 30 billion won. It said that despite sports events such as the World Cup and the air-conditioner peak season, promotional expenses, rising component prices, and intensifying competition weighed on profitability.
Samsung Electronics' VD and DA divisions showed a sharp weakening from last year. In the first quarter last year, they posted sales of 14.5 trillion won and operating profit of 300 billion won, but in the second quarter those fell to 14.1 trillion won and 200 billion won, respectively. In the third quarter, they recorded sales of 13.9 trillion won and an operating loss of 100 billion won, and in the fourth quarter, while sales were 14.8 trillion won, they posted a loss of 600 billion won. In the first quarter this year, they returned to the black with sales of 14.3 trillion won and operating profit of 200 billion won, but both scale and profit and loss retreated from a year earlier.
In the second quarter, Samsung Electronics expects demand from an enhanced lineup including micro RGB TVs and sports events in the VD institutional sector. In the DA institutional sector, it is targeting the effects of AI Combo and the peak air-conditioner season. However, in its outlook for the second half, the company noted that, despite a recovery in air-conditioner demand, DA improvement could be limited by rising costs and the impact of tariffs.
Like LG Electronics, Samsung Electronics is also discussed as having potential for profitability improvement from tariff refunds, but the timing and scale differ significantly. An industry official said, "Unlike LG Electronics, Samsung Electronics' semiconductor institutional sector is also exposed to tariff effects, making the issue more complex. Even if refunds are received, the timing of recognition in results could differ," adding, "For now, the company is limited in disclosing information related to tariff refunds, so the impact will need to be assessed after final results."
◇ LG Electronics, recovery in home appliances and TVs is not yet
At LG Electronics, the Home Solution (HS) institutional sector, which handles home appliances, posted sales of 26.1259 trillion won last year, up 5.3% from a year earlier, but operating profit fell 1.7% to 1.2793 trillion won. The Media & Entertainment Solution (MS) institutional sector, which is in charge of the TV business, saw sales fall 7.0% to 19.4263 trillion won and posted an operating loss of 750.9 billion won. It swung to a loss in one year from an operating profit of 268.2 billion won for MS in 2024.
In the first quarter this year, the HS institutional sector posted sales of 6.9431 trillion won and operating profit of 569.7 billion won. The MS institutional sector also recorded sales of 5.1694 trillion won and operating profit of 371.8 billion won. The second-quarter outlook is also bright. Hana Securities projected LG Electronics' separate basis sales at 18.0577 trillion won and operating profit at 1.2489 trillion won. It analyzed that operating profit would jump 100% year over year, far exceeding market consensus. The biggest reason is the U.S. tariff refund effect. Hana Securities also assessed that, even excluding one-off factors, profitability is being defended by price hikes and cost efficiencies amid burdens from materials and supplies and logistics costs.
An industry official said, "Tariff refunds are not a recurring revenue source, so the rise in results does not mean structural improvement," adding, "Whether the MS institutional sector has escaped last year's 750.9 billion won loss and returned to a stable profit structure, and whether the HS institutional sector can maintain high profitability despite burdens from raw materials and logistics costs, will be the key points to watch in the earnings release."
◇ TVs become platforms, appliances become solutions
According to market researcher Omdia, global TV shipments in the first quarter rose 6% year over year to 50.3 million units. Retailers stocked up ahead of the North and Central America World Cup opening this year. However, increased shipments do not translate into improved profitability for Samsung Electronics and LG Electronics. According to Counterpoint Research, China's TCL increased TV shipments by 22% year over year in the first quarter, rapidly closing in on Samsung Electronics. Samsung Electronics even halted sales of some TVs and digital appliances in China due to intensifying local competition.
Samsung Electronics and LG Electronics are responding to worsening profitability by turning TVs from simple hardware into platforms that generate ongoing revenue. Samsung Electronics' VD institutional sector set out this year's strategies as strengthening AI features to bolster leadership in TV sales, accelerating growth in services, and expanding the OS business. The aim is to add software and platforms to hardware competitiveness. LG Electronics is pursuing the same strategy around webOS. The MS institutional sector is building a revenue model that includes not only TV hardware but also content, advertising, and services.
In home appliances, both companies are focusing on creating new sales sources. Samsung Electronics this year launched the EHS heat pump boiler in Korea. Heat pumps supply heating and hot water by using outside air heat and electricity. It also unveiled the "Samsung AI Modular Home," which combines AI appliances and SmartThings-based AI home solutions with modular wooden houses in partnership with Gonggan Jaejakso.
LG Electronics is focusing on subscriptions and business-to-business (B2B). First-quarter subscription sales were 640 billion won, up 15% year over year. The company is reducing its reliance on hardware sales, which are highly sensitive to economic cycles, by growing sales to corporate clients and increasing rental, lease, and service contracts.
Robotics is also cited as a new business area. Samsung Electronics is strengthening the foundation of its robot business through subsidiary Rainbow Robotics. LG Electronics likewise declared a direct entry into the home robot business and, leveraging its motor capabilities, is developing high-torque, precision-control actuators to seek separate revenue. Hana Securities analyzed that LG Electronics' Robotics business is building a data factory for training Humanoid Robot models and is proceeding in a direction that accumulates motion data needed to advance a Robot Foundation Model (RFM).