Fri, July 27, 2012
by Yoo Seungki
SEOUL, July 27 (Xinhua) -- Samsung Electronics, the world's largest maker of memory chips, televisions, flat screens and handsets, said Friday that its operating profit hit a new quarterly high in the second quarter helped by brisk sales of its Galaxy smartphones.
Consolidated operating profit reached a fresh record high of 6. 72 trillion won (5.89 billion U.S. dollars) in the second quarter, up a whopping 79.22 percent from a year earlier, according to an e- mailed statement. From three months before, the figure jumped 14. 93 percent.
The results were slightly up from the company's preliminary estimate of 6.7 trillion won announced earlier this month, and topped the previous record high of 5.85 trillion won tallied in the prior quarter. Samsung saw its operating profit breaching the previous high for three straight quarters.
Sales expanded 20.69 percent on-year to 47.6 trillion won in the three months ending June 30, and net profit surged 48.11 percent to 5.19 trillion won. The revenue results were slightly higher than an earlier estimate of 47 trillion won, and breached the previous record high of 47.3 trillion won registered for the fourth quarter of 2011.
All business units, excluding semiconductors, posted solid earnings in the second quarter. The semiconductor division saw its profits drop by 38 percent from a year earlier due to weak global demand for PC DRAM chips, but the mobile communications business led the earnings growth with its sales jumping by 75 percent helped by the successful launch of Galaxy S3 smartphone and robust Galaxy Note sales.
"Despite a difficult business environment, we achieved stable profits in the second quarter through our differentiated products and competitive technology," said Robert Yi, senior vice president and head of investor relations at Samsung.
Yi, however, cautioned over earnings outlook for the second half, saying that "continued fiscal instability in Europe and its effect on the global economy will result in the possibility of a slower-than-expected recovery and intensified competition."
The semiconductor division, including memory and system LSI businesses, logged an operating profit of 1.11 trillion won on revenue of 8.6 trillion won in the second quarter. The profit dropped 38 percent from a year earlier, with the revenue declining 6 percent.
Weak global demand for PC DRAM chips continued to weigh on the chip business, and a steepening price fall hampered stable growth in the NAND sector. Samsung predicted a weaker-than-expected recovery in demand for PC DRAM in the third quarter due to lackluster back-to-school orders and intensifying competition, but market conditions for NAND was expected to improve in the lead-up to the Black Friday.
The display panel segment recorded an operating profit of 750 billion won, up 470 billion won from the previous quarter. Sales expanded 16 percent on-year to 8.25 trillion won in the second quarter due to strong demand for high-end products such as panels for 3D TVs and LED TVs that offset weak demand for panels used in notebook PCs and monitors.
Samsung forecast demand for TV panels will grow in the third quarter as TV makers prepare for end-of-year high-demand season and the Chinese National Day holidays, saying that expansion of table PC market is forecast to fuel demand for tablet PC panels.
The IT & mobile communications division, which includes mobile communications, telecommunication systems, IT solutions and digital imaging, registered an operating profit of 4.19 trillion won on revenue of 24.04 trillion won in the second quarter. The revenue of the mobile communication business accounted for 20.52 trillion won, up 75 percent from the same period of last year.
The successful launch of Galaxy S3 and upbeat sales of Galaxy Note along with higher average selling price (ASP) than the previous quarter cushioned an on-quarter operating loss in IT solutions and telecommunication systems, said Samsung.
Samsung expected it will further strengthen its leadership in the high-end smartphone market in the third quarter, forecasting that sales of LTE-related equipment and demand for PCs and printers will turn around in the next quarter with the expansion of LTE networks in developed countries and modest revenue growth in IT products.
The consumer electronics division that makes TVs and home appliances logged an operating profit of 760 billion won in the second quarter, up 66 percent from a year earlier. Sales grew 7 percent to 12.15 trillion won over the same period.
The positive earnings were attributed to increased sales in developed markets for the premium TVs such as the flagship ES7000 and ES8000 models as well as expansion of region-specific LED TV models in emerging markets, Samsung said, adding that sales of air conditioners rose on the back of strong seasonal demand.
For capital expenditure, Samsung said that 14 trillion won was spent for the first six months of this year, with 9.7 trillion won invested in semiconductor business and 2.6 trillion won in the display panel segment. The first-half expenditure accounted for 56 percent of an annual budget of 25 trillion won planned for 2012.
