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Friday, October 26, 2012
 Samsung Posts Profit, Enjoys Strong Handset Sales
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Message Text: Samsung Electronics posted a fourth straight record quarterly profit of $7.4 billion, boosted by solid sales of its Galaxy range of phones despite the lower sales of memory chips.

The South Korean company announced revenues of 52.18 trillion Korean won on a consolidated basis for the third quarter ended September 30, 2012, a 26-percent increase year-on-year. For the quarter, the company's consolidated operating profit reached an all-time high of 8.12 trillion won, representing a 91-percent increase year-on-year. Consolidated net profit for the July-September period was 6.56 trillion won.

Samsung's solid performance is mainly attributed to increased sales of handheld phones and stronger demand for display panels. The company's Mobile Communications Business posted 26.25 trillion won in revenue for the quarter, accounting for more than half of Samsung's total revenue.

Samsung sold 56.3 million smartphones in the third quarter, according to research firm IDC, giving it a global market share of 31.3 percent - more than double that of Apple, which said it sold 26.9 million iPhones.

As for the display panel segment, increased shipments of Organic Light-Emitting Diode (OLED) and Liquid Crystal Display panels used in tablets and smartphones, as well as TVs drove up profitability.

Despite global economic uncertainties, Samsung's end-product and components business units saw sales climb compared with the same quarter last year. Digital Media & Communications - comprising the Consumer Electronics and IT & Mobile Communications business sectors - accounted for 41.90 trillion won in sales, up 41 percent year-on-year.

For Device Solutions, operating profits reached 2.29 trillion won on revenue of 17.40 trillion won. The Display Panel segment outperformed the Semiconductor Business, in terms of on-year revenue growth. On the currency market front, the depreciation of the euro and local currencies in emerging markets chipped away Samsung's bottom line by 570 billion won for the quarter.

"The business environment remained difficult with global economic uncertainties persisting amid the fiscal concerns in the US and Europe. However, we continued to break our quarterly profit records," said Robert Yi, Senior Vice President and Head of Investor Relations.

Mr. Yi said he expects market competition to intensify but "we will do our best to sustain our earnings momentum throughout the fourth quarter by implementing strategies we have developed for our businesses."

Looking ahead, for the remaining quarter, Samsung expects year-end seasonality to push up demand for mobile devices including tablet PCs, as new products make their way into markets with more competitive pricing. Year-end holiday promotions, robust demand in emerging markets and China's New Year holiday effect are expected to shore up global demand for IT products. The compan expects demand for PC DRAM to be weak due to oversupply, and sales of digital appliances will slow down due to unfavorable market conditions in developed economies.

During the conference call, Samsung said it has begun selling logic chips using a finer 28nm processing technology. As part of a strategy to cut its reliance on the volatile and cyclical memory chip business, the firm has been investing more in profitable logic chip business.

Samsung has also vowed to further strengthen its memory chip business by planning to mass produce advanced flash memory chips using a finer 10nm technology this year.

Samsung said it will book patent-related provisions once a U.S. court rules on its litigation with Apple. A U.S. federal jury said in August that Samsung had copied key features of the iPhone, awarding Apple $1.05 billion in damages. Apple has since asked for another $707 million, and the California court is set to rule on that in early December.
 
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