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Friday, April 27, 2012
 Samsung Posts Record Profit Boosted by Galaxy Sales
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Message Text: Samsung reported a record $5.2 billion profit in the first quarter, overhauling Nokia as the world's top mobile phone seller, and its Galaxy smartphones outstripped Apple's iPhone.

The South Korean company today announced revenues of 45.27 trillion Korean won on a consolidated basis for the first quarter ended March 31, 2012, a 22-percent increase year-on-year.

For the quarter, the company's consolidated operating profit reached an all-time high of 5.85 trillion won representing a 98-percent increase year-on-year. Consolidated net profit for the January-March period was 5.05 trillion won.

Despite a decrease in sales of semiconductor chips and TVs due to seasonal factors, an increase in rofitability in display panels and mobile phones pushed up quarterly operating profit margins by 1.7 percentage points to 12.9 percent.

Samsung's strong performance in the quarter was driven mainly by the IT & Mobile Communications (IM) segment, which is comprised of four businesses, Mobile Communications, Telecommunication Systems, IT Solutions and Digital Imaging. In particular, solid growth in the Mobile Communications business, with brisk sales of flagship GALAXY Note and GALAXY S II devices contributed to the company's profitability.

The consolidated operating profit for IT & Mobile Communications businesses reached 4.27 trillion won on revenue of 23.22 trillion won. The Display Panel business rebounded in the first quarter with operating gains of 280 billion won, following an uptick in demand for high-margin panels used in tablets, 3D/ LED TVs and premium OLED panels.

Looking into the second quarter, Samsung expects to improve profitability in the chip business with a recovery in PC DRAM price and by expanding its new product category with mobile application processors based on 32 nanometer-class process technology. Samsung plans to also bolster its competitive edge in mobile phones with the debut of new high-end smartphones, and by reinforcing the full lineup of products and its presence in emerging markets.

Samsung's Semiconductor Business - including Memory and System LSI - posted an operating profit of 760 billion won in the first quarter.

Weaker-than-expected off-peak season demand and a global supply crunch of HDDs coupled with low demand for PC DRAM chips and the oversupply of mobile DRAM impacted profit margins, in which the memory portion saw its revenue slip to 4.89 trillion won. For NAND, spot price remained weak due to sluggish demand compounded by early stage products from geometry migration flowing into the channel market.

Despite adverse market conditions, Samsung's chip business was buoyed by strong demand for server DRAM and by expanding our value-added product mix such as products based on the 30-nanometer-class and 20-nanometer-class process technologies. Increased orders for Solid State Drives (SSDs) and Embedded Multimedia Cards (eMMC) also helped the chip business to cushion the market squeeze.

In the second quarter, Samsung is poised to ramp up supply of high-capacity, power-efficient DRAM for servers based on its green memory solution. As for NAND, the company will spur growth by expanding the 20-nanometer-class portion. Sales of CMOS image sensors will remain high in the April-June quarter, as demand for smartphones equipped with high-resolution cameras is expected to be strong.

Despite traditionally weak seasonality, continued economic stagnation in Europe, and the prolonged supply shortage in the PC industry, the Display Panel Business was able to improve profitability by expanding sales of high-end premium panels such as LED TV and 3D panels, which pushed TV panel sales up in the mid-20 percent range on-year. Increased sales of high-resolution panels for tablet PCs and OLED panels for smartphones also helped boost profit in the quarter.

Looking ahead, although the market for monitor panels will remain stagnant, demand for tablet and notebook panels is expected to increase on seasonal education-related demand while TV panels are expected to lift due to Chinese Labor Day sales and the London Olympics.

Moving forward with the establishment of Samsung Display Corporation, the company will continue to enhance profitability by expanding sales of premium panel products such 3D, large size and LED panels, while smartphone demand is expected to continue to fuel OLED panel sales.

Samsung?s Consumer Electronics businesses, which encompass Visual Display and Digital Appliances, registered an operating profit of 530 billion won in the quarter, up 550 percent year-on-year, on revenues of 10.67 trillion won.

Although weak seasonality led to a quarter-on-quarter dip in revenue, strong sales of premium TVs in developed markets and LED TVs in emerging markets saw shipments outstrip market growth and drive a sharp increase in profitability.

In the second quarter, market growth for flat panel TVs in the mid-single digits is expected on rising demand in emerging markets and increased sales of LED TVs which are forecast to account for over 60 percent of the TV market in the quarter. In emerging markets, Samsung aims to expand its presence with region-specific LED TV models.
 
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