By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Seoul, Korea – Samsung Electronics reported higher sales and profits for the fourth quarter ended Dec. 31, 2012.
Revenues were 56.06 trillion Korean won, a 7-percent increase quarter on quarter. Consolidated operating profit for the quarter hit 8.84 trillion won, a 10-percent increase on quarter, while consolidated net profit for the same quarter was 7.04 trillion won.
The consumer electronics division – encompassing the visual display and digital appliances businesses – posted revenue of 13.95 trillion won for the quarter, up 20 percent quarter on quarter. The operating profit of 740 billion won amounted to an increase of 87 percent on the previous quarter and an increase on year.
Lifted by peak season sales, the market experienced stronger demand for TV products in both developed and emerging markets as LED TV sales drove overall market growth of more than 40 percent on quarter. Backed by favorable market conditions, Samsung outperformed the market for LED TVs with on-quarter growth of more than 50 percent. This was achieved by the company’s differentiated strategy of focusing on premium models for developed economies and region-specific models in emerging markets, Samsung said.
Heading into 2013, sales will be led by emerging economies and the LED TV segment, which will expand its proportion of total TV sales into the mid-80 percent range. In the first quarter, the company expects off-peak seasonality to dampen on-quarter growth, although demand will be up in comparison with the previous year, Samsung said.
Mobile communications generated quarterly revenues of 27.23 trillion won, a 4-percent increase compared with the previous quarter. The growth was mainly driven by solid sales of Samsung’s Galaxy S III and Galaxy Note II. All told, operating profit for IT and mobile communications, which encompasses four business units, was 5.44 trillion won on revenues of 31.32 trillion won.
Samsung’s said its lineup of LED TVs, including premium models targeting advanced markets and TVs tailored to emerging markets, has also improved quarter-on-quarter earnings. Although demand for home appliances retreated in the December quarter due to a tepid global economy, Samsung saw increased sales of high-end refrigerators and washers in the U.S. and in European markets.
The display panel business recorded an operating profit of 1.11 trillion won on revenue of 7.75 trillion won in the fourth quarter. This represented a 5-percent decline in profits compared with the previous quarter but was up from the corresponding quarter of 2011, the company said.
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, the company said.
In 2013 Samsung expects the market for large-size TV panels, those over 60 inches in size, to grow. Strong sales of tablet panels are also forecast to continue throughout the year. For the first quarter, however, panel demand is expected to be adversely affected by off-peak seasonality before recovering in March with new TV and tablet product launches by manufactures.
The IT and mobile communications business (IM) – comprised of mobile communications, telecommunication systems, digital imaging and media solution center businesses – posted operating profits of 5.44 trillion won on 31.32 trillion won in revenue for the period. Out of the total IM earnings, the handset-making unit claimed 27.23 trillion won in revenue in the October-December quarter.
Samsung led gains with its full lineup of entry- to mid-level smartphones, expanded sales of tablet PCs and an increase in average selling price from the previous quarter. The success was mainly brought on by strong sales of Galaxy S III and Galaxy Note II, which beat the popularity of their predecessors with record sales in record time, the company reported.
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, Samsung said.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.