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Samsung’s components businesses likely to suffer loss in Q2

[THE INVESTOR] Samsung Group’s electronic components businesses, including Samsung Electro-Mechanics, and Samsung SDI, are forecast to show disappointing earnings results for the April-June period, according to market analysts.

Samsung Electro-Mechanics will post 21.7 billion won ($18.9 million) in operating income, down 49.4 percent from the previous quarter, with its revenue coming in at 1.6 trillion won, up 2.6 percent from the first quarter, according to a recent investment report released by Daishin Securities.

Samsung Display’s exhibition venue at a display trade show / Samsung Display
Samsung Display’s exhibition venue at a display trade show / Samsung Display

“After ceasing its businesses for motor, tuner and power module last year, Samsung Electro-Mechanics’ reliance on its sister company Samsung Electronics has increased -- its sales to the latter accounts for 62 percent of its total revenue -- causing uncertainty in earnings improvement,” Park Kang-ho, an analyst from the securities firm said.

Samsung Group’s battery business affiliate Samsung SDI, which suffered from an earnings shock in the first three months this year by posting 704 billion won operating loss, will likely post an operating loss again in the second quarter.

Hana Financial Investment predicted that the operating loss of the battery maker would reach 38.2 billion won.

Samsung SDI and its rival LG Chem have failed to meet the standards for electric car battery required by Chinese authorities in recent weeks, and may be left out of the list of battery companies subject to receiving the Chinese government’s subsidy.

Samsung Display, a display affiliate of Samsung Group, will likely achieve a profit turnaround in the second quarter driven by the robust sales of organic light-emitting diodes, but its liquid-crystal display business will still suffer from an operating loss, according to market reports.

By Kim Young-won (