Samsung Electronics earnings meet forecast

Jon · Korean Citizen Joined: Mar 19, 2004 Posts: 525

Samsung Electronics Co. said yesterday it posted third-quarter operating profits of 2.13 trillion won, a figure that met market expectations.
The company also said it expected its handset sales volume to reach 100 million units this year.

Weaker chip prices slashed Samsung's third quarter profits by 30 percent compared with those from a year ago. However, the company still produced solid earnings after better-than-expected performances for both semiconductors and liquid crystal display units and is expected to keep-up its current growth momentum through the next quarter, the company said.

Samsung is also considering investing in an 8th generation liquid crystal display line while it has converted one of the semiconductor fabrication plants to exclusively produce NAND flash memory chips, according to Chu Woo-sik, head of investors relations.

"We intend to maintain growth momentum in the fourth quarter by expanding sales of high-value added semiconductor products and high-end handsets," Chu said.

The world's No. 2 memory chip maker after Intel Corp. reported an operating profit of 2.13 trillion won, up 29 percent growth from the previous quarter.

Sales and net profits also grew by 7 percent and 11 percent, respectively, to reach 14.5 trillion won and 1.88 trillion won.

The company said semiconductor and flat screen businesses produced steady profits thanks to seasonal factors coupled with advances in production technologies.

Fueled by a seasonal demand, sales and operating profits of the semiconductor division grew 10 percent and 2.8 percent from the last quarter, respectively, to reach 4.59 trillion won and 1.35 trillion won.

The company also cited better production capability of dynamic random access memory using 90 nanometer process as contributing to improved earnings.

Sales of NAND flash memory, which the company said now makes up nearly 50 percent of its semiconductor business, also showed stable growth.

The company said its 70nm process and "Multi Level Cell" technology helped to boost the sector's competitiveness. NAND flash memory is emerging as a major revenue generator due to the booming demand for MP3 players and its use in other mobile devices.

Performance of the LCD sector topped market expectations.

The company's LCD division saw sales rise sharply by 26 percent quarter-to-quarter to reach 2.68 trillion won, while operating profits also grew 10 percent to reach 300 billion won.

Successful operation of its 7th-generation line and focus on large-sized panels boosted earnings, the company said.

Outlook for the fourth quarter is encouraging with a shortage of TV panels also expected in the fourth quarter, the company added.

Samsung sold a total of 26.8 million handsets in the third quarter, a record-high on a quarterly basis. Sales and operating profits came to 4.6 trillion won and 550 billion won, respectively.

"The third quarter performance should help ease concerns about future earnings and be neutral or slightly positive for the share price, which has recently fallen," said Goodmorning Shinhan Securities, in a report.

Woori Investment & Securities Co. also said growth momentum would be maintained through the first quarter of next year, helped by a stable growth of the semiconductor division and release of new handsets.

Last year Samsung chalked up record net profits of 10.8 trillion won. The company, however, saw its earnings plummet significantly this year because of rising raw materials costs, the Korean currency's strength against the U.S. dollar, and an oversupply of major products.

(mhkim@heraldm.com)

By Kim Min-hee

2005.10.15