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Samsung Sales Rise 12%, Profit Jumps 40%

1/13/2006 08:59:00 AM Eastern

Seoul, South Korea — Strong demand for flat-panel televisions and semiconducters pushed up fourth quarter sales at Samsung 12 percent, to $16.1 billion, while net profit soared 40 percent in the last three months of 2005, reaching $2.66 billion.

Samsung, which manufactures its own flat-panel televisions and is a major OEM supplier of LCDs to makers of finished sets, reported sharp fourth quarter increases in LCD/PDP TV sales due to attractive pricing, while premium TV shipments continued to increase. On a global basis, fourth quarter revenue and profit produced strong growth due to solid sales of LCD monitors, DVD players and MP3 players — together with televisions.

However, Samsung’s digital media and appliance segment, mainly consumer electronics, reported a 12-month sales decline of 19 percent, to $6.7 billion, from $8.3 billion in 2004. Sales in the fourth quarter reached $1.6 billion.

Samsung did not compare fourth quarter 2005 financials to the last quarter of 2004, preferring to make its comparisons to the third quarter of 2005.

With prices of televisions falling, Samsung’s operating profit in its digital media business for the 12 months, ended Dec. 31, widened its negative numbers over the previous year. The CE segment reported a loss of $322 million in 2005, compared with a loss of $31.2 million the previous year.

The company’s LCD segment recorded a 12 percent sales increase in 2005, coming in at $10.1 billion, up from $9 billion a year earlier. Fourth quarter segment sales reached $3.1 billion. Samsung reported strong shipment growth of 32-inch-and-above panels, as well as notebook panels, due to lower prices and year-end demand.

Operating profit in the LCD business, however, dropped 61 percent year-to-year, reaching $758.3 million for 2005, down from $2 billion in 2004. Fourth quarter operating profit hit $415.5 million.

Samsung’s telecommunications business, second only in sales to semiconductors, saw flat sales of handsets during the 12 months. Revenue in 2005 reached $18.46 billion, up from $18.44 billion year-over-year. In the fourth quarter, handset sales were $4.8 billion.

The telecommunications business also was hurt by falling prices of handsets, with segment operating profit for the 12 months declining 18 percent, to $2.4 billion, from $2.9 billion in 2004. Fourth quarter operating profit was $394.7 million.

Major appliances, of which Samsung has an increasing position in the United States, enjoyed a 4 percent year-on-year sales increase, rising to $3.51 billion in 2005, from $3.39 billion the previous year. Fourth quarter sales came in at $779 million. The company reported a quarter-over-quarter sales increase of 7 percent for its refrigerators.

Operating profit in the major appliances business declined 70 percent in 2005, with the segment recording an operating loss of $93.5 million, compared with an operating loss of $51.9 million a year earlier. In the fourth quarter, appliances reported a $62.3 million loss.

Consolidated year-end sales at Samsung were flat in 2005, with the company reporting $59.68 billion, up from $59.86 billion in 2004.

Consolidated operating profit for the 12 months declined 33 percent, to $8.4 billion, from a year-ago $12.5 billion. In the fourth quarter, this figure was $2.2 billion. Net profit for the year slipped to $7.9 billion, from $11.2 billion in 2004.

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