Samsung SDI expects to recover earnings in second half of 2020

Samsung Electronics published its financial results for Q1 2020 a few days ago, and it predicted lower smartphone and TV demand for the second and third quarters of this year. Samsung’s battery and display material manufacturing arm revealed its earnings last week as well and reported plunged profits. Still, it is now forecasting its business to improve in the second half of 2020.

Samsung SDI is a Samsung affiliate company that develops batteries for smartphones, laptops, wearables, and electric vehicles. The company said that a drop in sales was caused due to the COVID-19 crisis and “seasonality“. It expects its battery business to start recovering in the second half of 2020 due to an expected pickup in demand for electric vehicle batteries, energy storage systems, and electrical tools.

Its small-sized polymer battery business, which accounts for nearly 30 percent of its sales, is likely to suffer due to the sluggish smartphone market. The company said that it would try to make up for those losses by increasing the sales of micro-sized batteries for wireless earphones (like the Galaxy Buds+) whose demand is exploding.

The South Korean firm also makes display materials such as polarizers for LCD panels and semi-materials for server DRAM chips. Samsung SDI mentioned in its quarterly report that it expects the demand for display materials to drop and the market for server DRAM materials to grow in the next quarter.

Samsung SDI reported revenue of KRW 2.39 trillion ($1.95 billion), an operating profit of KRW 54 billion ($44 million), and net profit of KRW 0.72 billion ($0.59 million). Although its revenue rose 4 percent from Q1 2019’s KRW 2.30 trillion ($1.88 billion) and beat analysts’ estimates, its operating profit plunged by 55 percent from KRW 118.8 billion ($97 million) in the same quarter.