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Tuesday,18-January-2022

Business

Samsung expects $8.3B in Q1 earnings on strong mobile biz

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Samsung Electronics on Wednesday expected a market forecast-beating earnings for the first quarter of 2021, estimating its operating profit at $8.3 billion for the first three months of the year, up 44.2 per cent from a year ago.

The forecast came as its mobile business fared well, offsetting a relatively tepid performance from the semiconductor business.

On a quarterly basis, Samsung’s first-quarter operating income was up 2.8 per cent from the last quarter of 2020, and the sales estimate was up 5.6 percent from the previous quarter.

Samsung, the world’s leading memory chip and smartphone vendor, did not break down performances of its respective business divisions, saying it will announce the detailed earnings later this month.

Analysts have been predicting that Samsung’s main cash cow chip business to report lukewarm earnings in the first quarter due to a monthlong shutdown of the company’s semiconductor plant in Austin, Texas, where a severe winter storm caused a power outage in February.

Samsung’s chip business is estimated to have logged an operating income of below 4 trillion won in the first quarter, reports Yonhap news agency.

“The downside of Samsung’s first-quarter earnings would be the foundry business because losses are inevitable from the Austin factory shutdown,” said Park Sung-soon, an analyst at Cape Investment & Securities.

“Its estimated damage from the shutdown is about 300 billion won.”

It was the mobile business that anchored Samsung’s first-quarter earnings, analysts said, thanks to strong sales of Galaxy smartphones. They expect the company’s IT & Mobile Communications division to have posted an operating income of over 4 trillion won in the first quarter.

Samsung has been introducing new Galaxy S devices in mid-February each year, but this year, the company released the S21 in January with lower price tags. The company also held a global launching event for its mid-tier Galaxy A series smartphones for the first time last month to better target budget phone users.

“With robust sales of the Galaxy S21 and the Galaxy A series devices, the average selling price (ASP) of its smartphone products is expected to have increased sharply,” said Pak Yu-ak, an analyst at Kiwoom Securities.

Samsung’s consumer electronics unit, which oversees TV and home appliances, also contributed to the company’s strong first-quarter performance, according to analysts, with some expecting it may have racked up an operating profit of up to 1 trillion won in the first three months of the year.

They predict Samsung, also the world’s largest TV vendor, to have reported a double-digit on-year growth in TV shipments in the first quarter, while solid demand of premium home appliances to continue with the pandemic-induced stay-at-home trend.

Samsung’s display panel business is expected to have logged an operating profit of around 500 billion won, according to analysts, with increased OLED panel sales.

Samsung’s earnings may further improve in the second quarter with a recovery in the semiconductor sector.

A rise in DRAM and NAND prices will also propel Samsung’s chip unit performance and is likely to make up for a sales decline from its mobile business in the second quarter, according to analysts.

Business

Tata Motors to raise passenger vehicle prices

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Automobile manufacturer Tata Motors will marginally increase the price of its passenger vehicles from Wednesday (January 19).

According to the company, there will be an average increase of 0.9 per cent, depending on the variant and model.

“At the same time, the company has also taken a reduction of up to Rs 10,000 on specific variants, in response to feedback from customers.

“While the company is absorbing a significant portion of the increased costs, the steep rise in overall input costs has compelled it to pass on some proportion through this minimal price hike.”

Additionally, the company has decided to offer ‘price protection’ on Tata cars booked on or before January 18.

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Business

GST hike deferment, PLI make textile stocks’ attractive, several Cos shares double

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Shares in textile business have witnessed a consistent uptick in the recent months due to various policy measures and on hopes of a firm outlook for the sector going ahead.

Besides, the GST council’s recent move to defer rate hike on textiles has buoyed investors’ sentiment.

In its latest GST council meeting, it was unanimously decided to defer a hike in rates on textiles from 5 per cent to 12 per cent, which was to come into effect from January 1.

The matter will be discussed again in the next council meeting.

The deferment came as several states flagged higher tax rates on textile products to be put on hold.

The decision by the Council gave a breathing space to the industry.

Accordingly, stocks of several textile firms zoomed.

Till date, shares of Bhilwara Spinners, Nitin Spinners and Nahar Spinning Mills have seen a sharp rally.

The shares of Bhilwara Spinners, Nitin Spinners and Nahar Spinning Mills companies rose 252 per cent, 316 per cent, 711 per cent, respectively, over the past one-year period.

Notably, much of the rally in the textile stocks was due Centre’s production-linked incentive (PLI) schemes in the key manufacturing sectors, which included the textiles sector.

On September 8, 2021, the Union Cabinet had cleared the PLI scheme for the textile sector with an estimated budget outlay of Rs 10,683 crore.

The Centre, through the scheme, aims to provide a big fillip to the man-made fibres and technical textiles segments by promoting industries that invest in the production of some select textile categories.

Consequently, shares Of companies such as Alok Industries rose 40 per cent, Trident 333 per cent, KPR Mill 315 per cent, Arvind 195 per cent, Welspun India 134 per cent, Gokaldas Exports 344 per cent, Lux Industries 147 per cent, Filatex India 109 per cent, and Ambika Cotton Mills 105 per cent during the period.

In addition, analysts said that the stock price movement is likely to continue in the near future.

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Business

Ford India closure: Compensation talks on with workers

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A couple of rounds of talks on the compensation to be paid to the workers have been held between the representatives of Ford India Private Ltd’s workers and the management, said a worker union leader.

He said the company management wants to conclude the talks and arrive at a settlement by February 2022.

“Couple of rounds of talks have been held with the workers in Chennai. We have given our charter of demands and the management said it has to be negotiated,” the Chennai plant union official told IANS preferring anonymity.

According to him, talks with the workers in the Gujarat plant have also started.

“We have asked for compensation for completed and remaining years of service. The company is not agreeable for the same. The management has not indicated as to the compensation they are willing to pay to the workers,” the union official said.

Majority of the workers are young and have about 25 years of service remaining before they retire and the compensation calculated on that basis will be a sizeable sum, is the management’s view.

However, the parent company will be infusing funds in dollars and as per the exchange rate between dollar and the rupee the outgo for Ford India will not be much, the worker leader said.

Last September, Ford India announced its decision to wind down vehicle assembly in Sanand in Gujarat by the fourth quarter of 2021, and vehicle and engine manufacturing in Chennai by the second quarter of 2022.

Ford India has four plants in the country — vehicle and engine plants in Chennai and Sanand.

Ford’s ‘quit India’ decision will result in an uncertain future for about 5,300 employees — workers and staff, the officials said last year.

The Chennai plant has about 2,700 associates (permanent workers) and about 600 staff.

“In Sanand, the number of workers will be about 2,000,” Sanand workers’ union General Secretary Nayan Kateshiya had told IANS.

Ford India had said more than 500 employees at the Sanand engine plant, which produces engines for export, and about 100 employees supporting parts distribution and customer service, also will continue to support Ford’s business in India.

According to Ford India, about 4,000 employees are expected to be affected by its decision.

The workers at Ford India want the prospective buyer of the car plants to hire them.

Meanwhile, Ford India has declared a holiday for majority workers till January 27.

About 100-200 workers have been asked to report for work to make the spares for the aftermarket, the union leader said.

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