Samsung Electronics Reports 2006 First Quarter Earnings
The Semiconductor Business recorded declines in sales and operating income, at KRW4.33 trillion and KRW1.12 trillion, respectively, at the close of the quarter. The decrease is attributed to falling NAND flash memory prices in the traditionally slow first quarter and the change in the exchange rate. However, DRAM prices sustained levels of the prior quarter, notwithstanding the seasonality, from an increase in demand of DDR2 DRAMs. The sales portion of specialty DRAM products, such as mobile and graphic DRAM, expanded, bolstering operating margins.
In the second quarter, a 10-percent quarter-on-quarter bit growth through increased production of DDR2 products and continued favorable levels of demand for mobile and graphic DRAM products will contribute to higher revenue and profit figures. NAND flash memory prices will stabilize as demand will increase with growing utilization in upgraded multi-functional video and gaming products. In addition, Samsung expects to see visible signs of strengthening demand resulting from the first quarter price declines.
The Telecommunication Network Business shipped 29 million mobile phones in the first quarter. Despite increasing competition in the global mobile phone market, the company recorded its highest ever quarterly sales volume. However, the challenging foreign exchange rate and average sales price decline negatively impacted revenue, which decreased to KRW4.59 trillion from the previous quarter. Operating income increased by over 20-percent to KRW460 billion in the same period from marketing cost-saving efforts. As a result, operating margins improved to double digit levels, at over 10-percent.
Samsung anticipates volume growth in the second quarter with an expanded portfolio of high-end premium mobile phones that will include roll-outs of 2-megapixel and higher multi-functional slim phones and next-generation 3G HSDPA-based phones.
The LCD Business reported revenue and operating income of KRW2.68 trillion and KRW110 billion, respectively. Stagnant demand in the slow first quarter and decline in LCD panel prices are cited for the decline from the previous quarter. In the 40-inch and larger LCD TV panel segment, Samsung experienced a substantial 20% rise in volume at 600 thousand units.
In the second quarter, the company expects stabilization of market prices and sales growth as demand for large-sized TVs increases ahead of World Cup. In early January, the cost to bring Line 7-2 operational was significant but in the second quarter, the ramp-up of Line 7-2 to 45 thousand substrates per month will conclude, which will place the company in an advantageous position in the 40-inch and larger TV panel market segment. Cost competitiveness will strengthen, contributing to improved operating margins.
Digital Media Business sales decreased to KRW1.56 trillion due to seasonality and the exchange rate. Operating losses improved by KRW 150 billion to KRW50 billion from the prior quarter due to higher sales of premium-level LCD and PDP TVs and increases in LCD TV market share in the US market. In particular, around 40% of the KRW420 billion in equity gains resulted from solid digital media product sales performance at the overseas subsidiaries, reflecting a stronger profit positioning of the business.
The Digital Appliance Business posted sales of KRW750 billion and operating loss of KRW180 billion. Despite the revenue decrease, the business reduced loss levels by KRW50 billion through the sales increase of premium products, such as refrigerators and drum-type washing machines.
Woosik Chu, senior vice president and head of the investor relations team at Samsung Electronics stated, “Profit levels declined in the past quarter because of market challenges such as the exchange rate. Excluding the exchange rate variable, the financial results were on the whole reasonable.”
He added, “Management remains positive on performance for the second quarter because of the many promising business prospects although the exchange rate will remain a variable. In the Semiconductor Business, demand is expected to pick up with the first quarter decline of NAND flash memory prices, the start of 8Gb NAND flash memory and 60-nanometer process technology production will bring cost advantages, and sales of specialty DRAM products like graphic and mobile will increase. In the LCD Business, price declines will slow down and yields will stabilize in Line 7-2 resulting in improved cost competitiveness. The Telecommunication Network Business expects growth in sales volume with the launch of next-generation 3G HSDPA-based phones and a variety of multi-functional slim phones.”
삼성전자 개요
삼성전자는 반도체, 통신, 디지털 미디어와 디지털 컨버전스 기술을 보유한 글로벌 리더다. 삼성전자는 디지털 어플라이언스 부문, 디지털 미디어 부문, LCD 부문, 반도체 부문, 통신 네트워크 부문 등 5개 부문으로 이뤄져 있다. 세계에서 가장 빠르게 성장하는 브랜드인 삼성전자는 스마트폰, 디지털 TV, 메모리 반도체, OLED, TFT-LCD 분야에서 세계 선두 주자다.
웹사이트: http://www.samsung.com/sec
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