Samsung Electro-Mechanics on track to break 2 trillion won in annual operating profit for first time
Samsung E&A eyes record orders and first-ever 1 trillion won annual operating profit
Samsung Heavy Industries rebounds on FLNG expansion
Samsung Biologics beats market expectations
Samsung SDI expected to return to profit in 2026
Samsung Electronics is closing in on the title of the world's most profitable tech company this year, poised to surpass Nvidia on the back of a blockbuster performance in its semiconductor business. While those astronomical earnings have drawn most of the attention, other affiliates across the group are quietly posting massive order wins and sharp improvements in profitability — prompting analysts to say the Samsung Group as a whole has entered an era of unprecedented prosperity.
Samsung Electro-Mechanics is expected to surpass 2 trillion won ($1.51 billion) in annual operating profit for the first time this year, according to industry sources. The figure is forecast to exceed 5 trillion won next year.
The company, which has long operated in the electronic components business, is entering a new growth phase as orders pour in for multilayer ceramic capacitors for AI servers and semiconductor package substrates.
Its revenue dependence on Samsung Electronics, once a defining feature of its business, fell below 30 percent in 2024 and dropped further to 26 percent in the first half of this year — yet earnings have continued to surge.
Samsung Electro-Mechanics has posted growth every quarter this year. Its third-quarter operating profit is expected to reach 660 billion won, up 154 percent from the same period last year.
The company is also gaining ground in the package substrate market. Nvidia has selected Samsung Electro-Mechanics as a key partner to expand production capacity for flip-chip ball grid array substrates, a high-performance semiconductor substrate. Backed by Nvidia funding, Samsung Electro-Mechanics plans to build dedicated semiconductor package substrate production lines at its Sejong and Busan facilities.
Samsung's heavy industry affiliates also continued to improve their earnings in the third quarter.
Samsung E&A posted a preliminary third-quarter operating profit of 500.6 billion won on a consolidated basis, up 183.6 percent from a year earlier. Sales rose 45.8 percent to 2.91 trillion won, while net profit climbed 37.7 percent to 216.7 billion won.
On a cumulative basis through the third quarter, Samsung E&A recorded sales of 7.79 trillion won and operating profit of 961.9 billion won.
Samsung E&A attributed the earnings surprise to the full recognition of revenue from large-scale chemical and advanced industrial projects, combined with rigorous cost management and productivity gains driven by AI, digital twin and robotics technologies.
New orders have far exceeded the company's original annual target of 12 trillion won. Third-quarter new orders reached 9.4 trillion won, bringing the cumulative total to 17.1 trillion won. The order backlog at the end of the third quarter stood at 27.2 trillion won — roughly three years' worth of work based on last year's sales of 9 trillion won.
A major driver was a 4.7 trillion won fertilizer plant project awarded last month by SABIC Agri-Nutrients, the fertilizer subsidiary of Saudi Arabian state petrochemical company SABIC, which Samsung E&A won on a sole-contractor basis.
Samsung E&A has since raised its annual order target to 19 trillion won and lifted its operating profit forecast from the original 800 billion won to 1.4 trillion won. The company is now targeting both a record annual order haul and its first-ever annual operating profit exceeding 1 trillion won.
The order momentum is expected to carry into next year.
In a recent report, Meritz Securities said orders from advanced industries are set to grow next year, given that investment by affiliates including Samsung Electronics, Samsung Electro-Mechanics and Samsung Biologics is expected to accelerate. The brokerage added that inquiries for refinery projects are also increasing, underpinned by record refining margins, though risks tied to the timing of any end to the war remain.
Samsung Heavy Industries, which is scheduled to release its earnings on Thursday, is also expected to report improved results on the back of favorable industry conditions.
According to financial data provider FnGuide, Samsung Heavy Industries' third-quarter sales are estimated at 3.17 trillion won and operating profit at 342.8 billion won — up 20.3 percent and 44 percent, respectively, from the same period last year.
In the second quarter, Samsung Heavy Industries posted consolidated sales of 3.23 trillion won and operating profit of 325 billion won, gains of 20.4 percent and 58.7 percent, respectively, from a year earlier.
The company is expected to sustain its profitability improvement through revenue recognition from high-priced vessels and expansion of its floating LNG production facility business. In the commercial vessel segment alone, it had already secured approximately $7.5 billion in orders as of end-September, surpassing its annual target of $5.7 billion by 132 percent.
In the offshore plant segment, Samsung Heavy Industries is pursuing a contract for a large Canadian Western FLNG unit in the first half of next year, following the award of the Delfin FLNG Unit 2 contract from the United States in the second half of this year. FLNG revenue is forecast to expand to around 3.2 trillion won by 2027. Floating data centers are also drawing attention as a new growth engine.
Samsung Biologics posted third-quarter sales of 1.49 trillion won and operating profit of 640.1 billion won, beating market expectations by 10 percent and 5 percent, respectively. Growth continued as revenue from its fifth plant and its US facility was recognized, while all four existing plants maintained full-capacity operations.
Samsung SDI, which posted an operating loss of 1.7 trillion won last year, is expected to swing to a profit of around 500 billion won for the full year. In the fourth quarter in particular, analysts forecast the company will turn profitable even excluding the benefit of the US Advanced Manufacturing Production Credit, driven by expanded shipments of energy storage systems.
joze@heraldcorp.com
keg@heraldcorp.com
