Samsung Electronics on Friday reported a record
operating profit of 5.3 trillion won ($4.72 billion)
in the fourth quarter, thanks largely to booming
The S. Korean company today announced revenues of 47.3
trillion Korean won on a consolidated basis for the
fourth quarter ended December 31, 2011, a 13-percent
increase year-on-year. For the quarter, the company
posted consolidated operating profit of 5.3 trillion
won, representing a 79-percent increase year-on-year.
Consolidated net profit for the quarter was 4 trillion
The fourth quarter results brought Samsung's full year
2011 revenue to an all-time high of 165 trillion won,
up 7 percent from the previous year. Net income
registered 13.73 trillion won, down 15 percent
compared with 2010, while operating profit was 16.25
trillion won, a 6-percent on-year decline.
Highlighting the quarterly performance, the
Telecommunications businesses reached record quarterly
earnings of 17.82 trillion won, up 52 percent from the
previous year, with growth mainly driven by strong
sales of Samsung's GALAXY S II and GALAXY Note.
Operating profit for the businesses also hit a record
2.64 trillion won on-quarter.
"Despite intensified competition amid the global
economic slowdown, our Telecommunications businesses
continued to post solid earnings with an enhanced
line-up of high-end smartphones, resulting in higher
average selling price (ASP). Moreover, improved
profitability and earnings growth of our Set
businesses, including smartphones and flat panel TVs
led to our company's strong earnings," said Robert Yi,
Senior Vice President and Head of Investor Relations.
Yi also attributed the solid performance to Samsung's
differentiated technology, cost competitiveness,
targeted marketing activities and supply chain
management (SCM) capabilities throughout all business
Samsung's lineup of LED TVs, including premium models
for advanced markets and region-specific models for
emerging markets, has also improved quarter-on-quarter
On the components business side, the Semiconductor
Business saw demand for PC DRAM remain weak but growth
of specialty products such as server and mobile DRAM
was constant due to the rising demand for smartphones
and tablet PCs. Although profitability for memory
chips and LCD declined, rapid growth in system LSI and
OLED panels was a promising signal for future growth.
In 2012, capital expenditure (Capex) is forecast to
amount to 25 trillion won, in which 15 trillion won
will be invested in the Semiconductor Business that
consists of memory and system LSI. Of the total Capex
planned for this year, 6.6 trillion won will be
allocated for investment in the Display Panel (DP)
segment, which encompasses LCD Business and subsidiary
Samsung Mobile Display.
Last year, Samsung executed a total of 23 trillion won
in investments, including 13 trillion won for
Semiconductor Business and 6.4 trillion won for the DP
segment. Capex for the fourth quarter was around 5.9
Samsung's Semiconductor Business - including Memory
and System LSI - posted consolidated operating profits
of 2.31 trillion won in the fourth quarter. Revenue
reached 9.17 trillion won, a 1-percent decrease
year-on-year. For the full year 2011, the chip unit
registered 7.34 trillion won in operating profits on
revenue of 36.99 trillion won.
The Semiconductor Business sustained profitability in
the quarter, amid weak market demand, thanks to a mix
of high-margin products such as servers and Solid
State Drives (SSDs) and robust demand for NAND chips
used in mobile devices such smartphones and tablet
Looking ahead, demand for PC DRAM is expected to
remain sluggish in the first quarter due to static
global market trends compounded by a recent disruption
in the supply of hard disk drives. Demand for NAND
flash chips is expected to remain solid with the
release of new mobile devices to market, while system
LSI will see profits slip in the first quarter, due to
off-season market conditions.
For the year, Samsung plans to secure price
competitiveness in the market through differentiated
mobile and server DRAM products by expanding
30nm-class and below processes. In the case of NAND,
the company will focus on securing profitability by
consistently expanding 20nm-class processes.
Investment in system LSI will be expanded to
proactively respond to the rising demand for
application processors and image sensors.
The Display Panel Business recorded an operating loss
of 0.22 trillion won on revenue of 8.55 trillion won
in the fourth quarter and a sales increase of 19
percent from a year ago on the back of peak seasonal
For fiscal year 2011, the Display Panel Business
posted a 0.75 trillion won operating loss while
posting 29.24 trillion won in revenue.
Despite concerns over a slowdown in sales and a
sluggish European economy, demand remained steady
during the traditionally high end-of-year season,
including 'Black Friday' sales in North America,
helping the TV panel market to post a 5-percent
on-quarter increase. However, IT panel demand was
negatively impacted due to the flooding in Thailand,
On the back of value-adding products such as LED and
3D TVS, Samsung outpaced market growth by achieving a
more than 20 percent increase in TV panel shipments
compared to the previous quarter.
Looking ahead, weak seasonality is expected to dampen
demand in the first quarter, while demand in 2012 is
likely to remain stagnant on concerns over the global
economy and oversupply. Samsung will look to secure
growth in 2012 with a differentiated product mix,
including tablet, 3D and LED television panels, while
strong demand for smartphone display panels is
forecast to continue.
The Telecommunications businesses - including mobile
communications and telecommunication systems - posted
a record quarterly operating profit of 2.64 trillion
won for the period. Fourth quarter revenue reached a
record 17.82 trillion won compared with 11.75 trillion
won for the same period of 2010.
The stellar performance has allowed Samsung to
register full year 2011 operating profit of 8.27
trillion won, up 90 percent on-year. Total sales for
fiscal year 2011 also hit an all-time yearly high of
55.53 trillion won, accounting for almost one-third of
Samsung Electronics' total revenue for the year.
Samsung's flagship GALAXY S II smartphone and its full
lineup of high-end mobile devices, such as the GALAXY
Note and the GALAXY Nexus, and entry-level models
drove up revenue for the year by almost 40 percent
compared with the previous year.
All told, shipments of Samsung smartphones rose by
approximately 30 percent in the fourth quarter,
compared with the previous quarter.
For the global market outlook for this year, demand
for entry-level smartphones and tablet PCs will
increase significantly, while the growth momentum for
feature phones is expected to stay static. Emerging
markets and the spread of LTE (Long-Term Evolution)
wireless telecommunications technology have also
contributed to the growth of the smartphone market,
which is expected to grow by more than 30 percent.
The Telecommunication System Business will further
solidify its leadership in the wireless network market
with the expansion of the LTE service in Korea and
Samsung's Digital Media & Appliances businesses, which
encompass Visual Display, Digital Appliances, IT
Solutions, and Digital Imaging, posted quarterly
revenues of 16.96 trillion won for the October to
December period, up 4 percent year-on-year. The
businesses registered an operating profit of 0.57
trillion won in the fourth quarter.
For the full year 2011, the Digital Media businesses'
combined revenue totaled 58.92 trillion, with
operating profit up 229 percent on-year to 1.41
Sales of LED TVs grew strongly during the fourth
quarter on traditionally high seasonal demand,
achieving 40 percent growth on-quarter. Against this,
Samsung outperformed the market by focusing on sales
of premium models, shipping over 55 percent more LED
TVs compared to the previous quarter.
In 2012, weak seasonality in the first quarter will
see an on-quarter decrease in demand although overall
market growth is expected for the year, driven by
strong growth momentum in emerging markets. In
developed markets, Samsung will leverage its premium
LED television offerings to lift sales as LED TV sales
rise to account for more than 60 percent of the global
flat panel TV market in 2012.