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Friday, March 19, 2010
LG and Samsung See Significant Growth

Samsung Electronics and LG Electronics have seen significant growth on Q4 2009, reinforcing market optimism that strong demand recovery is in place.

Samsung confirmed its 2009 financials, reported on key business sector developments, and approved new board-level initiatives at the company's 41st Annual General Meeting, held on Friday at world headquarters in Seocho-dong here.

At the meeting, Samsung confirmed the strength of its recent fiscal performance. The company reported consolidated full-year financial statements for 2009 as operating profit of 10.9 trillion Korean won on sales of 136 trillion won. For the first time, Samsung achieved the double benchmark of consolidated sales of more than 100 billion won and operating profit of more than 10 trillion won.

"In 2009, following the global financial crisis, Samsung faced an extremely challenging business environment and cut-throat competition. However, we overcame this to achieve record financial results and make 2009 a year of great progress for Samsung," said Geesung Choi, Samsung Electronics President and CEO.

In 2009, Samsung began mass production of the world's first 40-nanometer DRAM chip and 30-nanometer NAND flash memory, increasing the company's technological and competitive edge as the world's largest memory chip manufacturer. Samsung competes with Hynix and U.S. Micron Technology in memory chips.

Samsung's advantage in large-screen TV panels expanded in 2009 through high-end features such as LED backlights and 240Hz frequency technology, maintaining market leadership through high product quality and greater cost competitiveness. The world's top maker of LCD flat screens competes with Sharp and Sony in the sector.

Samsung also gained market share in 2009 in the mobile phone market, launching new high-end touch screen mobiles and smart phones while implementing aggressive promotional campaigns in emerging markets. Samsung is the No.2 mobile phone maker and competes with Nokia and LG in mobiles. Samsung and LG together control more than 30 percent of the global mobile market, but their share in the smartphone market is below 5 percent.

Samsung's rival LG Electronics also today reported record revenues and operating profits in the fourth quarter of 2009, reflecting the results of the company's successful strategy and competitiveness during the current recession.

Record sales and operating profits were reported for the three months ending Dec. 31, 2009. Sales on a global basis (including LG?s overseas subsidiaries) rose 6.8 percent to KRW 14.3 trillion (USD 12.2 billion) year-over-year. Operating profit was up to KRW 446.7 billion (USD 382 million) resulting in a margin of 3.1 percent, 2.3 percent points higher than the fourth quarter last year.

2009 annual sales on a global basis soared 12.5 percent to a company record-high level of KRW 55.5 trillion (USD 43.4 billion) with operating profit recording KRW 2.9 trillion (USD 2.3 billion).

The LG Home Entertainment Company saw fourth quarter sales rise by 18 percent to KRW 5.9 trillion (USD 5.0 billion), returning an operating profit of KRW 271.6 billion (USD 232 million) for a margin of 4.6 percent, 5.2 percent points higher than the previous year, as a result of the rising demand for LCD TVs and Plasma TVs. Unit sales of total flat panel TVs jumped 52 percent year-over-year to6.6 million sets from 4.3 million. Quarter-over-quarter unit growth was also seen in both LCD TVs and Plasma TVs, 38 percent and 29 percent respectively. Annual sales reached KRW 19.6 trillion (USD 15.3 billion), jumping 19.9 percent from the previous year, mainly led by record unit sales of 19.5 million flat panel TVs. On the whole, profitability increased due to higher sales and more aggressive cost management.

The LG Mobile Communications Company reported sales of KRW 4.2 trillion (USD 3.6 billion) in sales, 7.4 percent lower than the 2009 fourth quarter. Price erosion and an increase in marketing expenses for year-end inventory clearance and emerging market channel expansion resulted in lower profitability compared to the third quarter, LG said.

The LG Home Appliance Company posted a sales increase of 6.8 percent in the fourth quarter, compared with the same period last year. The LG Air Conditioning Company recorded a 9.4 percent decline in fourth quarter revenues on a KRW base (3 percent rise on a USD base) to KRW 619.9 billion (USD 530 million) year-over-year.

The LG Business Solutions Company announced a 10.8 percent rise in year-over-year fourth quarter sales to KRW 1.3 trillion (USD 1.1 billion) with an operating profit of KRW 57.6 billion (USD 49 million).

2010 1Q Business Direction and Prospects

LG expects market demand to rise as the global economy begins to emerge from the recession. On a global basis, LG Electronics expects sales growth -- especially from LCD TVs on a USD base -- as a result of conversion to digital TV in developed markets and increased demand due to World Cup soccer and Olympic Games in 2010. LG?s mobile communications business is targeting a 19 percent increase in unit sales to 140 million, focusing on the exploding smartphone category and differentiation in content and services. Solar-cell, LED lighting and new solutions businesses in automotive and commercial areas represent new business engines expected to increase revenues. LG?s profitability is expected to improve year-over-year, driven by premium products in home entertainment and home appliances.

Samsung's executives also outlined the company's strategies for double-digit sales growth and increased profit in 2010. Additionally, the company said it would increase corporate investment year-on-year in 2010, with new capital expenditures allocated flexibly based on changes in the external operating environment as well as business performance.

"This year, Samsung Electronics seeks to continue to be a 'market creator' by meeting the needs of our customers and earning their confidence, while at the same time becoming a creative leader that contributes to the development of society," Choi said.

The company identified three main strategies for long-term success: Enhancing competitiveness through active and aggressive business strategies; developing new technologies as a growth engine for sustainable development; and expediting improvement in the speed and efficiency of the company's major business units.

Both Samsung and LG have won market share from Japanese companies such as Sony and Sharp to emerge as global brands, but rivals are restructuring and beefing up their product line-ups. However, Japanese firms are expected to aggressively tackle the market share loss. Sony, which is falling behind both Samsung in LCD TVs and Apple's iPod in portable music, reported a first profit in five quarters last month as a restructuring at the Japanese electronics maker starts to pay off.

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