Samsung Beats Woes

Electronics giant back in the black in Q1 with 470 bln won in net profit despite economic slump

Samsung Electronics Co. posted 470 billion won in operating profit on a consolidated basis during the first quarter, recovering from 740 billion won in operating losses during the fourth quarter of last year, the company announced April 24.
The company has been able to recover 1.21 trillion won in operating profit in Q1 despite the economic downturn. The company also said its Q1 sales amounted to 28.67 trillion won, down 13 percent from the preceding quarter at 33 trillion won, due to non-seasonal factors and the global economic slump.
On a non-consolidated basis, the company posted 18.57 trillion won in sales during Q1 with operating profit of 150 billion won and net profit of 620 billion won due to the depreciation of the Korean currency.
Officials of the company said IT sales, in particular, suffered from contracted growth due to the economic slump worldwide and other non-seasonal factors, recording negative growth, but memory chips and LCD did all right compared to other IT products. The IT sector's Q1 sales totaled 5.22 trillion won, down 5 percent from the preceding quarter on a consolidated basis with operating profit falling to 670 billion won. On a non-consolidated basis, Q1 sales amounted to 3.74 trillion won and 650 billion won in losses.
The company plans to push the sale of its next-generation products including 2G DDR2, 1G DDR3 and to try to cut costs to make its products price competitive and expand their markets in the months ahead this year.
The company also plans to increase the number of embedded products to diversify its product mix in order to secure high productivity and work on ensuring its future growth through products such as SSD by strengthening the marketing of these products to continue to expand their potential.
The LCD sector has had a difficult time from reductions in prices and weakened demand worldwide, forcing a production cut of 10 percent in large LCDs. The company was able to increase the sale of its large LCDs by 10 percent in the quarter, unlike many of its rivals who suffered losses.
The company sold 4.11 trillion won worth of LCDs in the first quarter, down 22 percent compared to the fourth quarter of last year, with operating profit declining 310 billion won, but the company maintained its top position in terms of market share in the global LCD market with segregated product quality and cost cuts.
Samsung Electronics still feels that the uncertainty will remain for the second quarter, too, but the market is expected to improve some as many countries employ economic stimulus measures including those to fan consumption expenditure and thus prompt makers to gradually increase orders for LCDs. The company will also make continuous investments in the search for new growth engines.
In the IT area, despite the difficult conditions, products such as cell phones, network and computers did better than expected in the first quarter, recording 9.77 trillion won in sales on a consolidated basis, down only 5 percent from the preceding quarter. Non-consolidated sales amounted to 8.06 trillion won and operating profit hit 940 billion won.
In the case of handsets, the company expects to retain the largest market share in the cell phone market globally and the highest profits in the cell phone industry.
In the case of network products, the company has been able to maintain the continuous expansion of the sector through the growth of the WCDMA business and the successful launching of the WiMax business in such countries as the United States and Russia. The sale of computers ― especially notebook computers ― expanded rapidly in a number of foreign countries including China and those in Europe, contributing to the company's total sales revenue in the first quarter.
The company expects the economic uncertainty will remain in the second quarter with the global hand phone market estimated to be down by 10 percent, but the company will try to expand the sale of hand-phones at a higher pace than the current market growth rate. Also in the cards is a plan to expand the smart phone lineup by launching the sale of a touch screen phone line and the Android phones in response to the diversified market demand. nw

(left)Samsung Vice Chairman & CEO Lee Yoon-woo. Samsung Electronics has released LED TV sets for the first time in Korea.