Samsung Electronics
Reports 2005

Record Quarterly Revenue of 15.52 Tln Won

Samsung Electronics Co., Ltd. announced its financial results for 2005 fourth quarter ended December 31, 2005. The company on January 13 posted net income of 2.56 trillion won, on revenue of 15.52 trillion won. Operating income for the fourth quarter was 2.14 trillion won, compared with 2.13 trillion in the previous quarter.
Net income in the fourth-quarter increased 36% compared with the previous quarter, while revenue jumped 7% compared to the previous quarter.
"Despite challenging market conditions, we achieved strong profit growth in the fourth quarter driven by healthy, solid results in our key business units and overseas subsidiaries,"said Chu Woo-sik, senior vice president and head of Samsung Electronics'investor-relations team. "This is a result of our competitiveness and focus on innovation."Revenue and operating income growth for the quarter were driven by continued strength in the Semiconductor and LCD businesses. Operating profit increased slightly in the fourth quarter from the previous quarter even though the company set-aside provisions for a newly adopted long-term, incentive-based compensation structure after the decision to abolish stock-options. The company also announced revenue of 57.46 trillion won for the fiscal year ended December 31, 2005. Net income for the fiscal year 2005 was 7.64 trillion won and operating income was 8.06 trillion won.
Sales and net income of the Semiconductor Business increased to 5.09 trillion won and 1.62 trillion won, respectively, as demand for NAND Flash chips used in MP3 players and mobile phones remained robust. Migration to the finer process technology in NAND Flash helped reduce manufacturing costs and boost profitability. Operating profit margins stood at 32% in the fourth-quarter, a 3%-point increase from the previous quarter.
Samsung expects solid momentum heading into 2006, as demand for value added, "specialty DRAMs"used in graphic-focused products and 8Gb NAND Flash is expected to increase.
The Telecommunication Network Business posted revenue of 4.95 trillion won, and operating income of 380 billion won. Samsung sold 27.2 million phones in the fourth quarter, the highest number of units on a quarterly basis. Demand for D600, 3G phones, and high-end premium phones, remained strong in the fourth quarter in Europe.
Samsung expects global demand for mobile phones to increase 5%-10% in 2006, and the company is confident to keep market leadership with the expansion of the high-end premium handset portfolio including 3G phones and WiBro.
The LCD Business reported revenue and operating income of 3.01 trillion won and 400 billion won, respectively. The full ramp up of the latest seventh-generation production line helped Samsung Electronics post solid results and shore up profit margins in the fourth quarter. Margins in the fourth quarter was 13%, up 2% points from the previous quarter.
The seventh generation line processes glass sheets that measure 187 centimeters by 220 centimeters on which eight 40-inch panels or six 46-inch panels can be made with little waste. In January 2006, Samsung opened a second production line, or 7-2, and began shipping the first panels off the line. The two production lines are expected give further cost advantages to Samsung Electronics. nw

Samsung Electronics Vice Chairman Yun Jong-yong