Samsung Second Quarter Earnings Boosted By Mobile Sales
Samsung Electronics reported on Friday a record operating profit of $5.9 billion for the June quarter, as Galaxy S handset sales helped stretch its lead over Apple.
Samsung announced revenues of 47.60 trillion Korean won on a consolidated basis for the second quarter ended June 30, 2012, a 21-percent increase year-on-year.
For the quarter, the company's consolidated operating profit reached a record 6.72 trillion won, representing a 79-percent increase year-on-year. Consolidated net profit for the April-June period was 5.19 trillion won.
Samsung posted solid sales and maintained its profit streak in the second quarter across all business segments, excluding semiconductors, amid lingering global business uncertainties. Digital Media & Communications - comprising the Consumer Electronics and IT & Mobile Communications business sectors ? accounted for 36.57 trillion won in sales, up 37 percent year-on-year.
For Device Solutions, the results were mixed. While operating profit for the Display Panel segment registered an on-year increase, the Semiconductor Business saw profits drop by 38 percent compared with the same period last year, despite outperforming the previous quarter.
By business unit, the Mobile Communications Business was one of the leading growth drivers in the June quarter with 20.52 trillion won in revenue. With the successful launch of this year?s flagship GALAXY S III smartphone and robust GALAXY Note sales, Samsung's handset unit saw earnings jump by 75 percent from a year earlier.
The Visual Display Business also contributed to earnings gains with its diverse portfolio of TV models for both developed and emerging markets with 8.58 trillion won in revenue for the quarter.
"Despite a difficult business environment, we achieved stable profits in the second quarter through our differentiated products and competitive technology," said Robert Yi, Senior Vice President and Head of Investor Relations. "As we move into the second half, continued fiscal instability in Europe and its effect on the global economy will result in the possibility of a slower-than-expected recovery and intensified market competition."
Overall, Samsung expects the third quarter to be marginally positive as demand for consumer electronics goods, including smartphones and tablets, remains strong and a stream of new products hit the market. Supply for display panels is also expected to increase, as TV makers prepare for the year-end holiday season.
Samsung's Semiconductor segment - including the Memory and System LSI businesses - posted an operating profit of 1.11 trillion won on revenue of 8.6 trillion won for the quarter, which equates to a 6-percent year-on-year decline in sales.
Weak global demand for PC DRAM chips still weighed on Samsung's push for a recovery, although it responded to increased orders for server and mobile DRAM and hastened migration to the 30-nanometer and below process.
The NAND market picked up on higher OEM-related demand, improving quarter-on-quarter sales, particularly in solution products such as Solid State Drives (SSDs) for notebook PCs and Embedded Multimedia Cards (eMMC), but a steepening price decline hampered stable growth.
The System LSI Business, which creates application processors (AP) and image sensors for smartphones, is forecasted to maintain profitability in the third quarter as demand for faster and higher-capacity chips used in mobile devices increases.
Samsung will also look to gain a leading edge in the mobile AP business, following the recent announcement of the acquisition of CSR's mobile business and NanoRadio, which the compamy expects to reinforce its mobile AP technology.
In the third quarter, Samsung anticipates a weaker-than-expected recovery in demand for PC DRAM due to lackluster back-to-school orders and intensifying competition.
In contrast, the company expecta market conditions for NAND to improve in the lead-up to the National Day and Black Friday holidays in China and the U.S., respectively.
The Display Panel segment recorded an operating profit of 750 billion won on revenue of 8.25 trillion won. This amounted to a 470 billion won increase in profit from the previous quarter and a 16-percent increase in sales compared to the same period last year.
Despite weaker than expected panel demand due to the economic slowdown in Europe and low seasonality, Samsung?s total TV panel shipments increased in the low 10-percent range on-year due to strong sales of high, value-added products such as panels for 3D TVs and LED TVs.
Looking ahead, demand for TV panels is expected to grow in the next quarter as TV makers prepare for the end-of-year high-demand season and the Chinese National Day holidays. The effect of an energy saving subsidy in China is also expected to stimulate demand for LED TV products.
For the IT panel sector, the continuation of weak demand for panels used in notebook PCs and monitors was offset by strong demand for tablet PC panels. Launches of new smartphone products also contributed to continued profitability in OLED panels.
In the third quarter, economic uncertainty in developed markets and the sluggish market demand for notebook PCs and monitors is expected to dampen overall demand. The expansion and diversification of the tablet PC market, however, is forecast to fuel an increase in demand for tablet PC panels and Samsung will aim to expand sales of LCD and OLED panels for smartphones.
Samsung's Consumer Electronics Division ? encompassing the Visual Display and Digital Appliances businesses ? posted revenue of 12.15 trillion won for the second quarter, a 7-percent increase year-on-year. The operating profit of 760 billion won represented an increase of 66 percent compared with the same period last year.
Although demand for TVs remained flat year-on-year, Samsung posted improvements in both shipments and profitability. Increased sales in developed markets for the company?s premium TVs, such as the flagship ES7000 and ES8000 models, and expansion of region-specific LED TV models in emerging markets spurred a significant lift in earnings compared with the same quarter of last year.
This increase in demand saw Samsung increase its portion of LED TV sales from the mid 60-percent range to a mid 80-percent share, quarter-on-quarter.
Heading into the third quarter, although growth in developed markets may stall, Samsung aims to expand its presence in emerging markets with region-specific products and entry-level LED TVs. The company will also look to continue its leadership in Smart TVs in developed markets with continued cooperation with media and content providers.
For the quarter, the company's consolidated operating profit reached a record 6.72 trillion won, representing a 79-percent increase year-on-year. Consolidated net profit for the April-June period was 5.19 trillion won.
Samsung posted solid sales and maintained its profit streak in the second quarter across all business segments, excluding semiconductors, amid lingering global business uncertainties. Digital Media & Communications - comprising the Consumer Electronics and IT & Mobile Communications business sectors ? accounted for 36.57 trillion won in sales, up 37 percent year-on-year.
For Device Solutions, the results were mixed. While operating profit for the Display Panel segment registered an on-year increase, the Semiconductor Business saw profits drop by 38 percent compared with the same period last year, despite outperforming the previous quarter.
By business unit, the Mobile Communications Business was one of the leading growth drivers in the June quarter with 20.52 trillion won in revenue. With the successful launch of this year?s flagship GALAXY S III smartphone and robust GALAXY Note sales, Samsung's handset unit saw earnings jump by 75 percent from a year earlier.
The Visual Display Business also contributed to earnings gains with its diverse portfolio of TV models for both developed and emerging markets with 8.58 trillion won in revenue for the quarter.
"Despite a difficult business environment, we achieved stable profits in the second quarter through our differentiated products and competitive technology," said Robert Yi, Senior Vice President and Head of Investor Relations. "As we move into the second half, continued fiscal instability in Europe and its effect on the global economy will result in the possibility of a slower-than-expected recovery and intensified market competition."
Overall, Samsung expects the third quarter to be marginally positive as demand for consumer electronics goods, including smartphones and tablets, remains strong and a stream of new products hit the market. Supply for display panels is also expected to increase, as TV makers prepare for the year-end holiday season.
Samsung's Semiconductor segment - including the Memory and System LSI businesses - posted an operating profit of 1.11 trillion won on revenue of 8.6 trillion won for the quarter, which equates to a 6-percent year-on-year decline in sales.
Weak global demand for PC DRAM chips still weighed on Samsung's push for a recovery, although it responded to increased orders for server and mobile DRAM and hastened migration to the 30-nanometer and below process.
The NAND market picked up on higher OEM-related demand, improving quarter-on-quarter sales, particularly in solution products such as Solid State Drives (SSDs) for notebook PCs and Embedded Multimedia Cards (eMMC), but a steepening price decline hampered stable growth.
The System LSI Business, which creates application processors (AP) and image sensors for smartphones, is forecasted to maintain profitability in the third quarter as demand for faster and higher-capacity chips used in mobile devices increases.
Samsung will also look to gain a leading edge in the mobile AP business, following the recent announcement of the acquisition of CSR's mobile business and NanoRadio, which the compamy expects to reinforce its mobile AP technology.
In the third quarter, Samsung anticipates a weaker-than-expected recovery in demand for PC DRAM due to lackluster back-to-school orders and intensifying competition.
In contrast, the company expecta market conditions for NAND to improve in the lead-up to the National Day and Black Friday holidays in China and the U.S., respectively.
The Display Panel segment recorded an operating profit of 750 billion won on revenue of 8.25 trillion won. This amounted to a 470 billion won increase in profit from the previous quarter and a 16-percent increase in sales compared to the same period last year.
Despite weaker than expected panel demand due to the economic slowdown in Europe and low seasonality, Samsung?s total TV panel shipments increased in the low 10-percent range on-year due to strong sales of high, value-added products such as panels for 3D TVs and LED TVs.
Looking ahead, demand for TV panels is expected to grow in the next quarter as TV makers prepare for the end-of-year high-demand season and the Chinese National Day holidays. The effect of an energy saving subsidy in China is also expected to stimulate demand for LED TV products.
For the IT panel sector, the continuation of weak demand for panels used in notebook PCs and monitors was offset by strong demand for tablet PC panels. Launches of new smartphone products also contributed to continued profitability in OLED panels.
In the third quarter, economic uncertainty in developed markets and the sluggish market demand for notebook PCs and monitors is expected to dampen overall demand. The expansion and diversification of the tablet PC market, however, is forecast to fuel an increase in demand for tablet PC panels and Samsung will aim to expand sales of LCD and OLED panels for smartphones.
Samsung's Consumer Electronics Division ? encompassing the Visual Display and Digital Appliances businesses ? posted revenue of 12.15 trillion won for the second quarter, a 7-percent increase year-on-year. The operating profit of 760 billion won represented an increase of 66 percent compared with the same period last year.
Although demand for TVs remained flat year-on-year, Samsung posted improvements in both shipments and profitability. Increased sales in developed markets for the company?s premium TVs, such as the flagship ES7000 and ES8000 models, and expansion of region-specific LED TV models in emerging markets spurred a significant lift in earnings compared with the same quarter of last year.
This increase in demand saw Samsung increase its portion of LED TV sales from the mid 60-percent range to a mid 80-percent share, quarter-on-quarter.
Heading into the third quarter, although growth in developed markets may stall, Samsung aims to expand its presence in emerging markets with region-specific products and entry-level LED TVs. The company will also look to continue its leadership in Smart TVs in developed markets with continued cooperation with media and content providers.
