Samsung Electronics and LG Display, two of South Korea's top technology companies, are bracing for a very difficult year and remain cautious on any near-term recovery in the battered sector.
Consumer demand for electronic gadgets has slumped as the financial crisis grew into a broad recession that has already engulfed the United States and much of Europe and has dampened demand in once-resilient emerging markets.
“Developed countries may post negative growth this year,” said Samsung vice chairman and chief executive Lee Yoon-woo.
“Demand is expected to decline in some core businesses that had been leading our company's growth,” he said, referring to television and handsets in particular.
Lee was speaking at the company's annual shareholders meeting.
Samsung, the world's top maker of memory chips and liquid crystal displayers, posted its first-ever quarterly net loss in January as a sharp downturn battered its memory chip unit.
LG Display, the world's No. 2 maker of liquid crystal display (LCD) screens, also provided a cautious outlook on the sector.
“When Taiwanese makers increase production again, there could well be another round of output cuts,” Chief Executive Kwon Young-soo told reporters on the sideline of the company's annual shareholder meeting.
“(Panel) prices are not falling further, but it is difficult to expect a rise,” Kwon said.
The company had seen its utilization levels recover to close to full levels recently after a sharp cut in output late last year, but may resume output cuts this year if its Taiwanese rivals step up production, CEO Kwon Young-soo said.
LG Display swung to a record loss in the fourth quarter, its first loss in seven quarters, in part due to a price-fixing fine, and predicting lower shipments and weak prices.
Samsung's Lee however said it aims to maintain its profit and work at posting sales growth that would exceed the market rate in 2009.
Lee said Samsung would be managed in a financially disciplined way with an emphasis on maintaining stable liquidity. He also said Samsung would invest taking into account several risk scenarios.
Samsung has so far declined to release any specific forecasts or targets for 2009. It has previously said it would be conservative in this investments this year and signaled a sharp drop in capital expenditure after spending more than 11 trillion won in 2008. (Reuters)