Samsung Posts Record Quarterly Profits Driven by Smartphone Sales
Samsung Electronics has announced its fourth-quarter financial results, and posted a 76 percent jump in its profits, driven largely by smartphone sales.
The South Korean firm reported a net profit of KRW7.04 trillion (US$6.6 billion), compared to KRW 4.01 trillion a year ago. Revenues were also up, by 19 percent to KRW56 trillion (US$52.6 billion).
The growth was mainly driven by solid sales of Samsung's Galaxy S IIl and Galaxy Note ll. All told, operating profit for IT & Mobile Communications, which encompasses four business units including Mobile Communications, was KRW5.44 trillion on revenues of KRW31.32 trillion.
"Despite uncertainties in Europe and concerns over the U.S. fiscal cliff creating a difficult business environment, we did our best this quarter to achieve strong earnings based on a strategic focus on differentiated and high value-added products as well as our technological competitiveness," said Robert Yi, Senior Vice President and Head of Investor Relations.
Mr. Yi however also expressed caution over the continued strength of the Korean won in 2013.
The company said that the furious growth spurt seen in the global smartphone market last year is expected to be pacified by intensifying price competition compounded by a slew of new products. In the first quarter, demand for smartphones in developed countries is expected to decelerate, while their emerging counterparts will see their markets escalate with the introduction of more affordable smartphones and a bigger appetite for tablet PCs throughout the year.
On the components business side, demand for PC DRAM remained weak but growth of high value-added products such as server and mobile DRAM was constant due to increased sales of mobile devices. While the Semiconductor Business landed profits in the quarter, the Display Panel segment struggled, as demand for IT panels for notebooks and monitors remained slow. On the other hand, profitability in LCD panels for TVs and OLED panels for smartphones prevented wider losses.
The Semiconductor Business sustained profitability in the quarter, amid weak market demand, thanks to a mix of high-margin products such as servers and Solid State Drives (SSDs) coupled with differentiated 20-nanometer class NAND flash chips. A competitive edge in mobile application processors for smartphones and tablet PCs also contributed to the bottom line.
Samsung was able to secure stable growth for the quarter with an improved product mix and strengthened sales of high-end panels. Sales of LED and narrow bezel panels for premium TVs continued to grow, although the company's TV panel sales dropped in the mid single-digit percentage range from the same period last year. However, increased sales of tablet panels as well as OLED panels for premium smartphones contributed to steady growth.