Samsung Electronics on Friday reported a record quarterly profit boosted by
growing smartphone sales and a surge in earnings at its display panel division.
Samsung Electronics announced revenues of 57.46 trillion won on a consolidated
basis for the second quarter ended June 30, 2013, a 9-percent increase from the
Consolidated operating profit for the quarter reached 9.53 trillion won,
representing a 9-percent increase on quarter, while consolidated net profit for
the same quarter was 7.77 trillion won.
In contrast to the first half of last year, revenue was up 19 percent and
operating profit increased 51 percent in the first half of 2013 as profitability
in the components business improved.
Highlighting the quarterly performance, growth remained steady in high-end
smartphone and premium television businesses. Most noticeably, a growth spurt in
shipments for OLED panels for smartphones and high consumer demand for air
conditioners spurred growth.
Led by the launch of GALAXY S4, smartphone shipments and revenue increased from
the March quarter. Samsung expects the strong growth streak for the smartphone
market to continue in the third quarter albeit at a slower pace.
The components business improved both in terms of revenue and operating profits
from a quarter earlier due to a higher demand for mobile device-related parts.
However, overall sales of logic chips declined due to lower mobile application
Escalated investments in R&D and in distribution channels, as well as expenses
on new product launches have dampened wider gains for IT & Mobile Communications
(IM) Division, which encompasses the Mobile Communications, Networks, and
Digital Imaging businesses.
"Entering into a typically strong season for the IT industry, we expect earnings
to continue to increase. However, we cannot overlook delayed economic recovery
in Europe and risks from increased competition for smartphone and other set
products," said Robert Yi, Senior Vice President and Head of Investor Relations.
Mr. Yi added, "We expect to improve profit yields in the second half due to
high-margin, differentiated components products, as well as gains stemming from
increased smartphone and TV shipments."
The Display Panel segment?s operating profit jumped 46 percent on quarter to
1.12 trillion won thanks to strong demand for high value-added panels for IT and
TV panels sized 60-inch and over. A mid- to low-end TV lineup targeting emerging
markets and a range of premium TV offerings were credited for the Visual Display
business? earnings. As for the next quarter, uncertainties over Europe?s economy
and Chinese subsidies for electronics goods could possibly hinder growth.
For OLED panels, positive growth for high-end smartphone displays is expected to
be maintained in the second half. To ensure continued momentum, Samsung will
concentrate on offering differentiated smartphone displays through technological
competitiveness, including flexible display technology.
Samsung Electronics plans to spend a record total of 24 trillion won, an
increase of over 1 trillion won from the previous year. This amount may increase
depending on market conditions in the second half and the outlook for next year.
The Semiconductor business will invest 13 trillion won, while the Display Panel
segment will inject 6.5 trillion in capex. The increase in spending is aimed at
enhancing Samsung?s competitive edge in DRAM, NAND and System LSI products.
Samsung?s Semiconductor businesses - including Memory and System LSI - posted
8.68 trillion won in consolidated revenue. With a differentiated product mix
including server and mobile DRAMs, Samsung was able to improve sales with high-
performance, high-density chips. The NAND flash memory segment remained
competitive through process migration to 10-nanometer class process technology.
Samsung will try to ramp up sales of application processors (AP) with 28-
nanometer process technology and high-resolution image sensors. Demand for the
components is expected to grow as mobile devices needing more processing power
roll out into market in the remaining quarters.
By diversifying its product portfolio and consumer base, and by gearing up
development of 20 nm-class and 14 nm-class process technology, Samsung aims to
achieve a stable level of growth.
The IT & Mobile Communications division - consisting of Mobile Communications,
Networks and Digital Imaging businesses - posted operating profits of 6.28
trillion won on 35.54 trillion won in revenue for the June quarter.
Driven by Samsung?s flagship GALAXY S4 and the GALAXY Note 8.0, which have been
well received by the market, quarterly revenue for the mobile sector climbed 9
percent compared with the prior quarter.
Looking ahead, Samsung smartphone sales are expected to pick up in the third
quarter and outperform global market forecasts. Smartphones will grow to account
for over 70 percent of the company?s mobile phone shipments in the third quarter
due to the strengthening mid- to low-end mobile market. Growth momentum in the
July-September quarter will remain on course, although at a slightly reduced
In the case of tablet PCs, Samsung will post growth in the mid-10 percent range
with the introduction of new tablets. Shipments of tablets will jump to a little
over 30 percent on-quarter, outpacing the market.
Samsung is also looking to improve profitability in IM through its lineup of
mid- to high-end hybrid tablet-laptop devices such as ATIV Q and wider adoption
of LTE mobile telecommunication technology.