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Samsung Reports Lower Profit, Higher Sales

7/29/2011 10:30:02 AM Eastern

Seoul, Korea - Samsung Electronics reported lower income but higher sales in the second quarter.

Consolidated net income for the quarter ended June 30 was 3.51 trillion won, representing an 18 percent decrease year on year. Revenues for the quarter were 39.44 trillion won on a consolidated basis, a 4-percent increase year-on-year.

Telecommunications drove revenue growth in the second quarter, with sales rising 43 percent year-on-year due to strong demand for Samsung's Galaxy SII smartphone and other mobile devices. Digital media and appliances saw sales increase from the previous quarter supported by improved demand for flat panel TVs.

The digital media and appliances businesses - including visual display, IT solutions and digital appliances - posted revenues of 14.07 trillion won for second quarter. The operating profit of 510 billion won represented an improvement on the 100 billion won registered the same period last year.

Samsung's flat panel TV shipments and profitability both increased for the quarter, as sales of LED TVs continued to pick up in developed and emerging markets. LED TV sales accounted for roughly half of all Samsung LCD TVs sold for the quarter, reflecting the wide acceptance of the new technology, the company said.

Overall, flat panel TV market demand in the third quarter is projected to increase in the mid 10-percent range quarter-on-quarter, supported by strong seasonality. Samsung aims to expand sales of Smart TVs by providing region-specific TV applications and content for viewers, Samsung said.

The company's telecommunications segment - including mobile communications and telecommunication systems - posted an operating profit of 1.67 trillion won on revenue of 12.18 trillion won. The businesses achieved an operating profit margin of 13.7 percent for the quarter.

Samsung's mobile communications business saw revenues rise 45 percent year on year to 11.69 trillion won.

Shipments of mobile handsets increased in the high-single-digit range quarter-on-quarter driven by brisk sales of smartphones including the flagship Galaxy SII, which rolled out globally during the quarter. The average sales price of handsets increased by more than 10 percent, the company said.

"Despite the challenging business environment and global economic uncertainties, we achieved continued year-on-year revenue growth in the second quarter driven by mobile device sales, particularly the success of our smartphones," said Robert Yi, VP and head of Samsung Electronics' investor relations team. "Heading into the third quarter - which typically sees increased consumer demand for electronics - we expect competition to remain tight, and will continue to enhance our cost competitiveness and technology leadership in the components businesses."

The display panel business recorded an operating loss of 210 billion won on revenue of 7.09 trillion won, down 9-percent in sales compared with the same period last year. Samsung said overall market shipments of LCD panels increased 8 percent quarter on quarter in expectation of the upcoming peak season and Chinese National Day, but panel inventory levels remained high due to slow set sales. Samsung's total panel shipments increased in the mid-10-percent range compared with the first quarter.

While the average sales price for LED panels for notebook PCs and monitors climbed moderately, prices dropped for TV panels over 40 inches.