As if you needed any further proof that Samsung is dominating the Android
(and mobile) market, look no further than their Q1 2012 earnings report. Today,
reported that they managed to rake in a cool $40 billion in sales with a
record $5.1 billion in operating profit (appox $4.46 billion after taxes).
Samsung is up with a 98% gain over this same time last year, and it’s all thanks
to their smartphone division which accounted for 73% of their profits.
And it looks like “record earnings” is a phrase you’re going to hear a lot
this year when it comes to Samsung. Their Galaxy S III has already generated
worldwide “next-gen iPhone-like buzz” with Samsung saying, “We are anticipating
strong demand for the Galaxy S III,” and that they expect it to be their “most
successful smartphone ever.” Looks like it will be called the Galaxy S III after
all? Only a few more days until we get to see the GS3 unveiled next week and
hopefully it lives up to all of our expectations. Full press release below.
Samsung Electronics Announces First Quarter 2012 Earnings
Results
(SEOUL–Korea Newswire) April 27, 2012 — Samsung Electronics Co., Ltd.
today announced revenues of 45.27 trillion Korean won on a consolidated basis
for the first quarter ended March 31, 2012, a 22-percent increase
year-on-year.
For the quarter, the company’s consolidated operating profit reached an
all-time high of 5.85 trillion won representing a 98-percent increase
year-on-year. Consolidated net profit for the January-March period was 5.05
trillion won.
Despite a decrease in sales of semiconductor chips and TVs due to seasonal
factors, an increase in profitability in display panels and mobile phones pushed
up quarterly operating profit margins by 1.7 percentage points to 12.9
percent.
In its earnings guidance disclosed on April 6, Samsung estimated
first-quarter consolidated revenues would reach approximately 45 trillion won
with consolidated operating profit of approximately 5.8 trillion won.
Samsung’s strong performance in the quarter was driven mainly by the IT &
Mobile Communications (IM) segment, which is comprised of four businesses,
Mobile Communications, Telecommunication Systems, IT Solutions and Digital
Imaging. In particular, solid growth in the Mobile Communications business, with
brisk sales of flagship GALAXY Note and GALAXY S II devices contributed to the
company’s profitability.
The consolidated operating profit for IT & Mobile Communications
businesses reached 4.27 trillion won on revenue of 23.22 trillion won. The
Display Panel business rebounded in the first quarter with operating gains of
280 billion won, following an uptick in demand for high-margin panels used in
tablets, 3D/ LED TVs and premium OLED panels.
“Despite difficult business environments including seasonal low demand for
major products such as PCs and TVs amid a global economic slowdown, we achieved
record quarterly results based on our differentiated products and technology
leadership. We cautiously expect our earnings momentum to continue going
forward, as competitiveness in our major businesses is enhanced,” said Robert
Yi, Senior Vice President and Head of Investor Relations.
Looking into the second quarter, Samsung expects to improve profitability in
the chip business with a recovery in PC DRAM price and by expanding its new
product category with mobile application processors based on 32 nanometer-class
process technology. Samsung plans to also bolster its competitive edge in mobile
phones with the debut of new high-end smartphones, and by reinforcing the full
lineup of products and its presence in emerging markets.
Capex 7.8 Trillion Won in Q1
Capital expenditure in the first quarter was 7.8 trillion won, with 5.8
trillion won invested in the Semiconductor Business and 1.3 trillion won in the
Display Panel segment.
Earlier this year, Samsung announced plans to spend a total of 25 trillion
won in capex for 2012.
Fifteen trillion won will be invested in the Semiconductor Business that
consists of Memory and System LSI. For the Display Panel segment, 6.6 trillion
won has been allocated for investment.
Organizational Change
Starting from the first quarter, the business segment financial disclosure
will reflect the organizational changes, which took place in December, 2011. We
will provide sales and earnings of Device Solutions, including Semiconductor and
Display Panel businesses; and Digital Media & Communications, including IT
& Mobile Communications and Consumer Electronics (CE) divisions.
IT & Mobile Communications includes Mobile Communications,
Telecommunication Systems, IT Solutions and Digital Imaging; and CE includes
Visual Display and Digital Appliances.
Seasonal Factors Dampen Chip Demand
Samsung’s Semiconductor Business - including Memory and System LSI - posted
an operating profit of 760 billion won in the first quarter. Revenue retreated
to 7.98 trillion won on-year, a 13-percent decrease compared with the same
period last year.
Weaker-than-expected off-peak season demand and a global supply crunch of
HDDs coupled with low demand for PC DRAM chips and the oversupply of mobile DRAM
impacted profit margins, in which the memory portion saw its revenue slip to
4.89 trillion won. For NAND, spot price remained weak due to sluggish demand
compounded by early stage products from geometry migration flowing into the
channel market.
Despite adverse market conditions, Samsung’s chip business was buoyed by
strong demand for server DRAM and by expanding our value-added product mix such
as products based on the 30-nanometer-class and 20-nanometer-class process
technologies.Increased orders for Solid State Drives (SSDs) and Embedded
Multimedia Cards (eMMC) also helped the chip business to cushion the market
squeeze.
Looking ahead, the global HDD supply shortage is expected to be alleviated in
the second quarter and demand for specialty DRAM products including mobile and
server DRAMs will be strong. However, elevated competition among manufacturers
of 30-nanometer-class chips will lead to a price decline.
In the second quarter, Samsung is poised to ramp up supply of high-capacity,
power-efficient DRAM for servers based on our green memory solution. As for
NAND, we will spur growth by expanding the 20-nanometer-class portion. Sales of
CMOS image sensors will remain high in the April-June quarter, as demand for
smartphones equipped with high-resolution cameras is expected to be strong.
Display Business Swings to Profit
Operating profit for the Display Panel Business turned around from the
previous quarter to register 280 billion won on revenue of 8.54 trillion won in
the first quarter.
Despite traditionally weak seasonality, continued economic stagnation in
Europe, and the prolonged supply shortage in the PC industry, the Display Panel
Business was able to improve profitability by expanding sales of high-end
premium panels such as LED TV and 3D panels, which pushed TV panel sales up in
the mid-20 percent range on-year. Increased sales of high-resolution panels for
tablet PCs and OLED panels for smartphones also helped boost profit in the
quarter.
Looking ahead, although the market for monitor panels will remain stagnant,
demand for tablet and notebook panels is expected to increase on seasonal
education-related demand while TV panels are expected to lift due to Chinese
Labor Day sales and the London Olympics.
Moving forward with the establishment of Samsung Display Corporation, the
company will continue to enhance profitability by expanding sales of premium
panel products such 3D, large size and LED panels, while smartphone demand is
expected to continue to fuel OLED panel sales.
Profits Propped Up by Strong Sales of Smart Devices
The IT & Mobile Communications division - including Mobile
Communications, Telecommunication Systems, IT Solutions and Digital Imaging -
registered quarterly operating profits of 4.27 trillion won for the first
period. Revenue reached 23.22 trillion won, and the mobile unit accounted for
18.90 trillion won, up 86 percent year-on-year.
Growth in shipments of Samsung’s flagship GALAXY Note and GALAXY S II and
other premium mobile devices yielded high returns, with significant growth in
China, Central and South America, the Middle East and Africa.
Samsung is expected to continue its strong growth momentum in the second
quarter, following the announcement of the next GALAXY device in London on May
3.
The Telecommunication Systems business saw growth both in revenue and
operating gains due to an increase in LTE (Long Term Evolution) wireless
broadband technology equipment. In the case of IT Solutions, a boost in sales of
mid-to-high-end products, including PCs and printers improved quarter-on-quarter
earnings.
We expect to further solidify our leading position in LTE business in the US
market and make further inroads into countries newly adopting the service.
Premium TV Sales Lift Profitability
Samsung’s Consumer Electronics businesses, which encompass Visual Display and
Digital Appliances, registered an operating profit of 530 billion won in the
quarter, up 550 percent year-on-year, on revenues of 10.67 trillion won.
Although weak seasonality led to a quarter-on-quarter dip in revenue, strong
sales of premium TVs in developed markets and LED TVs in emerging markets saw
shipments outstrip market growth and drive a sharp increase in profitability.
Highlights for the quarter included an increase in sales of more than 50 percent
for Samsung’s flagship 7000/8000 TV series on-year, while the Digital Appliances
Business improved profitability, both on-year and on-quarter, by increasing its
portion of premium product sales.
In the second quarter, market growth for flat panel TVs in the mid-single
digits is expected on rising demand in emerging markets and increased sales of
LED TVs which are forecast to account for over 60 percent of the TV market in
the quarter. In emerging markets, Samsung aims to expand its presence with
region-specific LED TV models, while its range of Smart TV models with enhanced
features will continue to maintain the company’s leadership in developed
markets.
As for digital appliances, demand is expected to rise led by growth in
emerging markets. Samsung will aim to improve profitability in the quarter by
enhancing R&D efficiencies, expanding sales of premium products and sales in
emerging markets, and capitalizing on strong seasonal demand for air
conditioners.
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10:47 AM
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