Samsung Electronics Posts 3rd Qr. Sales of 14.34 Tri. Won
- Reports operating profit of 2.74 tri. won

Samsung Electronics Co., Ltd. announced its financial results for the third quarter of 2004. The company achieved sales of 14.34 trillion won, generating profit of 2.74 trillion won and net profit of 2.69 trillion won. Year-on-year sales, operating profit and net profit grew by 27-percent, 34-percent and 46-percent, respectively.

The company continued to achieve sales of over 14 trillion won for the third straight quarter. For the three quarters of 2004, Samsung recorded sales of 43.7 trillion won, exceeding 2003 annual sales of 43.6 trillion won. Cumulatively, Samsung achieved operating profits of 10.48 trillion won for the first three quarters of 2004, becoming the first Korean company to transcend the 10 trillion won profit milestone. Quarter-on-quarter, sales decreased by 4-percent due to the state of the domestic market and weakening export conditions. Operating profits declined by 27-percent from rising raw material costs and increased marketing spend, including the Olympic sponsorship program.

The Semiconductor Business had another outstanding quarter with the stabilization of DRAM prices and the increased demand of NAND flash memory from a strategic drop in prices. Sales increased 4-percent quarter-on-quarter to 4.74 trillion won, the greatest ever recorded sales figure by the business. Operating profits were at 1.95 trillion won.

Despite the decrease in NAND flash memory prices, Samsung was able to sustain margins of over 40-percent through product differentiation and aggressive cost-cutting measures; evidence of the company's ever-growing competitiveness in the memory business.

The Telecommunication Network Business sold 22.7 million phones in the third quarter, a similar level as the second quarter, to record sales of 4.82 trillion won, notwithstanding the depressed demand in the domestic market and intensifying competition overseas. At the same time, operating profits declined to 610.6 billion won from the previous quarter.

While the ASP of mobile phones actually increased, strategic marketing and R&D investments, including Olympic marketing costs, were causes for the decline. On a cumulative basis, Samsung sold 65.5 million mobile phones during the three quarters of 2004 surpassing the 55.6 million units sold throughout the entire year of 2003. The company expects a 2- to 3-percent rise in market share from the 11-percent recorded last year. The LCD Business reported a quarter-on-quarter decrease of 23-percent for KRW 1.90 trillion in sales due to declining prices of large-sized LCD panels. Operating profits dropped 72-percent from the previous quarter to 225.0 billion won.

The Digital Media Business and Digital Appliance Business, which conducts 80% of their production and sales overseas, recorded a loss of 33 billion won and 9 billion won, respectively, due to affects of the stagnant domestic market.

Dr. Woosik Chu, Senior Vice President and General Manager of the IR Team, states,  "This third quarter, Samsung Electronics surpassed operating profits of 10 trillion won during difficult economic times not only in Korea but throughout the world. In three quarters, the company has already outperformed the sales reported during the entire year of 2003 and the semiconductor business managed to produce record quarterly sales." He adds, "The performance thus far speaks to the competitiveness of the company's differentiated businesses. Even as market conditions are expected to worsen, we will continue to expand our differentiated competitiveness to maintain our strong financial structure."  nw