Samsung Revenues and Profits Hit All Time High
Published on: 1st Jan 1970: 1:33am
South Korea's Samsung Electronics has reported that its fourth-quarter revenues rose by 7 percent to KRW 41.87 trillion (US$37.6 billion), while net profits jumped by 13 percent to KRW 3.42 trillion (US$3.07 billion). The fourth quarter results brought Samsung's full year 2010 revenue to an all-time high of KRW 154.6 trillion (US$138.7 billion), up 13-percent from last year. Full year net income reached a record high of KRW 16.15 trillion (US$14.5 billion), up 65 percent compared with the previous year.
Samsung said its performance in the fourth quarter continued to be driven by memory semiconductors and strong sales of its smartphones. On a quarter-on-quarter basis, however, profit margins decreased primarily due to weakening pricing for memory semiconductors and LCD panels, as well as price competition in the TV market.
"Despite the difficult business environment including reduced IT demand caused by the economic slowdown, we achieved record-high results both in terms of sales and operating profit in 2010," said Robert Yi, Vice President and Head of Samsung Electronics' Investor Relations Team. "However, considering overall business conditions, unlike 2010, we expect the traditional earnings pattern of a weak first half, with a strong second half to return in 2011."
Samsung expected price competition to intensify in the consumer electronics, IT and mobile device markets in 2011, while major components prices are also forecast to decline. To offset pressures stemming from adverse market conditions, Samsung will focus on the cost competitiveness of its memory semiconductor portfolio, reducing marketing expenses and increasing shipments of high-end smartphones and tablet devices.
Samsung said the forecast continued appreciation of the Korean won during 2011 could have a negative impact on earnings, but the company's diversified foreign exchange mix would limit the effect of movements in particular currencies.
Strong Smartphone Growth Powers Mobile Business
Samsung's telecommunications businesses - Mobile Communications and Telecommunications Systems - registered a record quarterly operating profit of KRW 1.44 trillion for the period, up 38 percent year-on-year. By finishing the year strongly, Samsung achieved full year 2010 operating profit of KRW 4.30 trillion (US$3.86 billion) on sales of KRW 41.20 trillion (US$37 billion) for its telecommunications businesses.
Driven by strong year-end demand for the company's flagship smartphones, Samsung's mobile device sales reached 80.7 million units for the quarter, up 17 percent year-on-year. This brought total sales for the year to 280 million units, registering growth of 23 percent and outperforming the overall market.
Following its introduction in June, Samsung's flagship Galaxy S smartphone has achieved worldwide sales of 10 million units, while the Galaxy Tab - an Android-powered tablet device - attracted strong year-end demand. In emerging markets, Samsung's diverse product mix of mass-market smartphones and touch-screen feature phones also registered solid sales growth.
While mobile device sales are expected to contract slightly in the first quarter of 2011 due to weak seasonal demand, Samsung forecast high single-digit sales growth for the year overall, driven by the fast-expanding smartphone and tablet segments. Samsung announced it will introduce the successor to its Galaxy S smartphone during the first half of 2011, featuring a dual-core processor and Super AMOLED Plus display.
With its growing lineup, the company is targeting smartphone sales of 60 million units for the year, double that of 2010.