Samsung Reports Record Year-End Profit

By Jeff Malester On Jan 24 2005 - 8:00am

For the first time in its 35 years in business, Samsung Electronics racked up a 12-month profit of over $10 billion, with consolidated net income for 2004 reaching $10.5 billion, an 81 percent increase over the $5.8 billion net registered one year ago.

Consolidated sales for the year soared 32 percent, hitting $56.1 billion, up from $42.4 billion in 2003. Operating profit over the 12 months, ending Dec. 31, reached $11.7 billion, a 67 percent increase over the $7 billion recorded year-on-year. Operating margin for the 12 months rose to 21 percent, up from 17 percent in 2003.

Fourth-quarter consolidated sales at Samsung reached $13.5 billion, down 3 percent from the third quarter, while net profit dropped 32 percent over consecutive quarters, to $1.8 billion. Fourth-quarter operating profit slid 44 percent over consecutive three-month periods, down to $1.5 billion. Operating margin in the fourth quarter hit 11 percent, down from 19 percent in the third quarter.

Digital media sales, Samsung's consumer electronics business, claimed only a marginal increase in sales for the 12 months, rising 4 percent to $7.8 billion from a year-ago $7.5 billion. Fourth-quarter CE sales dropped to $1.9 billion from $2.1 billion in the last three months of 2003, due mainly to a stagnant market in South Korea.

Samsung reported a CE operating loss for 2004, coming in at a negative $29.2 million, down from a 2003 operating profit of $146 million. In the fourth quarter, the CE operating loss was $126.5 million, while the CE segment was in the black last year, recording a small fourth quarter 2003 operating profit of $2.9 million.

Samsung's LCD business jumped 67 percent for the 12 months, hitting $5.5 billion, compared with last year's $5.1 billion. LCD operating profit jumped 111 percent in 2004 to $1.8 billion, up from $866.2 million in the previous 12 months. This strong performance was due to robust growth for large-sized panels for LCD monitors.

Samsung expects improved performance in 2005 from its CE business, with “momentum gains” in the digital TV segment.

Although LCD panel demand fell in the third quarter after an “incredible” climb through the first half of 2004, Samsung expects the continued drop in LCD panel prices to drive demand that will lead to a balancing of supply and demand in the second half of 2005.

The company's mobile phone segment had sales of $17.3 billion during the past 12 months, a 38 percent increase over a year-ago $12.5 billion. Fourth-quarter mobile phone sales hit $3.9 billion, an increase over the $3.5 billion reported in the last three months of 2003.

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