Samsung's Great Feat

Electronics giant posts $100 bln in annual sales, joining Siemens, Hewlett Packard

Samsung Electronics Co. posted record sales last year breaking the $100 billion level for the first time in its history. The record came as a big surprise to the company since its chip sector sales were down sharply, but its revenues were high enough to join an elite group of global electronics makers with more than $100 billion in annual sales: Siemens and Hewlett-Packard.
In an investor relations session, the company announced that its Q4 sales amounted to 17.5 trillion won, up 5 percent Y-o-Y and operating profit was 1.78 trillion won, down 14 percent from the preceding quarter, but exceeding expectations, and net profit was 2.2 trillion won, up 1 percent from the previous quarter. Consolidated sales revenue for the year, including those of the company's overseas affiliates, showed that sales totaled $103.4 billion.
The company expects to do very well this year, too, with all sectors of its operations projected to post 15 percent better performances than last year, including the chip sector.
The company will invest 11 trillion won in facilities and R&D activities, up from 10 trillion won last year.
Vice President Choo Woo-shik of the company in charge of the investor relations team said the Q4 record was even a big surprise to the company due to the sluggish performance of the chip sector with a crash in D-Ram chip prices to less than $1 per chip in Q4. The sales of memory chips accounted for a large part of the company's revenue, clouding the outlook.
The vice president said the company is grateful to other sectors'performances including LCD, TVs and handphones, among others, showing that they have found their places in the world market.
In the case of LCDs, the sector's operating profit jumped 37 percent to 920 billion won on sales of 4.46 trillion won, up 11 percent from the previous quarter. The TV, monitors, and notebook sectors have done well to dominate their respective markets last year.
In the case of handsets, sales jumped three times amounting to 46.3 million sets in Q4 as a result of both low-priced and expensive handsets, including 3G phones, doing well in the high-end and emerging markets.
In the digital media sector, Q4 sales posted 390 billion won in combined figures including those of affiliates, showing that the company outsold its rival Sony in the world market and continues to be the top TV maker in the world, a title it claimed in 2006 by beating Sony.
Vice President Choo denied the speculation that the chip sector has been damaged by saying the sector is still a dominant one in the world, beating its rivals in the market. The company still posted a 9 percent rise in operating profit of 430 billion won against sales of 4.9 trillion won, while Taiwanese chip makers have lost some 70 to 80 percent of their sales revenues. Chip sector President Hwang deserves big applause, Choo said.
This year, the chip sector would either make or break the company's performance because the company's other sectors have scarcely any more room for growth as they have reached the top in their respective areas, Choo said.
He went on to say that the company doesn't expect the sector to pick up in the first half because the market will experience a glut with many chip makers expanding their production facilities. But, the company expects business will pick up in the second half with the supply side going through restructuring with some 200 mm wafer makers going belly up. He said a number of D-ram chip makers in Germany and Taiwan are faced with technical difficulties, requiring additional restructuring, which will help improve the chip market rapidly in the second half when the chip industry will see the light at the end of the tunnel.
When Samsung Electronics launched its operations in 1969, sales for that year came to just 43 million won, but the company raked in over $100 billion in annual sales last year, a remarkable development by any measure. The combined sales including those of the company's overseas affiliates came to $103.4 billion, up 23.2 million times compared to the sales figure in the initial year of operation in 1969.
The company has become one of the rare electronics firms in the world with over $100 billion in annual sales, a truly monumental job in anyone's book; Only Siemens and Hewlett-Packard have also posted that much in annual sales. But, these two companies have many non-electronics products in their lines; HP printers and Siemens nuclear equipment and auto parts. Samsung is the only integrated electronics maker to post that much in annual sales in the world, Choo said. nw

Vice President Choo Woo-shik in charge of investor relations for Samsung Electronics Co.