Samsung Posts Strong Q4, Record Year

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Seoul, South Korea - Samsung Electronics reported a 7 percent increase in revenues and a 13 percent increase in net income for the fourth quarter, ended Dec. 31, 2010.

Samsung had revenues of 41.87 trillion Korean won on a consolidated basis for the fourth quarter and net income of 3.42 trillion won, a 13 percent increase year on year.

The fourth-quarter results brought Samsung's full-year 2010 revenue to an all-time high of 154.63 trillion won, up 13 percent from last year. Net income reached a record high of 16.15 trillion won, up 65 percent compared with the previous year, while operating profit was 17.30 trillion won, also a record.

Samsung's performance in the fourth quarter continued to be driven by memory semiconductors and strong sales of its cutting-edge smartphones. On a quarter-on-quarter basis, however, profit margins decreased primarily due to weakening pricing for memory semiconductors and LCD panels, as well as price competition in the TV market. 

"Despite the difficult business environment, including reduced IT demand caused by the economic slowdown, we achieved record-high results both in terms of sales and operating profit in 2010," said Robert Yi, VP and head of Samsung Electronics' investor relations team. "However, considering overall business conditions, unlike 2010, we expect the traditional earnings pattern of a weak first half, with a strong second half to return in 2011."

Samsung expected price competition to intensify in the consumer electronics, IT and mobile device markets in 2011, while major components prices are also forecast to decline. To offset pressures stemming from adverse market conditions, Samsung will focus on the cost competitiveness of its memory semiconductor portfolio, reducing marketing expenses and increasing shipments of high-end smartphones and tablet devices.

The LCD business recorded an operating profit of 0.10 trillion won on revenue of 7.20 trillion won in the fourth-quarter, down 1 percent from a year ago as increasing shipments could not offset price falls. For fiscal year 2010, Samsung's LCD business posted 1.99 trillion won in operating profit with 29.92 trillion won in revenue.

Overall unit sales for the period increased more than 10 percent quarter on quarter. While shipments for IT panels climbed supported by demand for tablet PCs, the fall in demand for TV panels was compounded by a buildup of inventory in the TV-set market, the company said.

Average industry sales prices retreated across all segments in the fourth quarter. The average price for TV panels dropped 12 percent, with prices for monitor panels dipping 5 percent and notebook PC panels falling 3 percent.

Samsung forecasted LCD panel prices will remain low in the first quarter of 2011 due to supply outpacing demand. However, the company anticipated incremental demand increases in the second half led by the economic recovery and inventory restocking by set makers. Samsung aims to drive market growth with a new lineup of entry-level LED panels and explore the high-potential market for tablet PC panels.

Samsung's telecommunications businesses -- mobile communications and telecommunications systems -- registered a record quarterly operating profit of 1.44 trillion won for the period, up 38 percent year on year. Fourth-quarter revenue reached 12.11 trillion won, compared with 10.17 trillion won for same period of 2009. By finishing the year strongly, Samsung achieved full-year 2010 operating profit of 4.3 trillion won on sales of 41.2 trillion won for its telecommunications businesses.

Driven by strong year-end demand for the company's flagship smartphones, Samsung's mobile device sales reached 80.7 million units for the quarter, up 17 percent year on year. This brought total sales for the year to 280 million units, registering growth of 23 percent and outperforming the overall market, Samsung reported

Following its introduction in June, Samsung's flagship Galaxy S smartphone has achieved worldwide sales of 10 million units, while the Galaxy Tab -- an Android-powered tablet device -- attracted strong year-end demand. In emerging markets, Samsung's diverse product mix of mass-market smartphones and touchscreen feature phones also registered solid sales growth.

While mobile device sales are expected to contract slightly in the first quarter of 2011 due to weak seasonal demand, Samsung forecast high single-digit sales growth for the year overall, driven by the fast-expanding smartphone and tablet segments. Samsung announced it will introduce the successor to its Galaxy S smartphone during the first half of 2011, featuring a dual-core processor and Super AMOLED Plus display to further enrich user experience. With its growing lineup, the company is targeting smartphone sales of 60 million units for the year, double that of 2010. In the tablet market, Samsung will complement its Galaxy Tab with a range of devices to optimally meet various user needs, the company said.

Samsung's digital media businesses, which encompass visual display, digital appliances, IT solutions and digital imaging, posted quarterly revenues of 15.97 trillion won for the October to December period, up 3 percent year on year. The businesses registered a loss of 0.17 trillion won despite improved performance in TV and IT products. For the full year 2010, the digital media businesses' combined revenue totaled 57.26 trillion, up 12 percent from 2009, with an operating profit of 0.49 trillion won.

Samsung shipped 12.72 million flat panel TVs in the fourth quarter, a 40 percent jump compared with the previous quarter and a 17 percent on-year increase. LED TVs sales grew strongly during the fourth quarter as consumers in developed markets continued to adopt this new technology. Market demand for LED TVs is forecast to rise further, with the portion of LED models in the overall LCD segment expected to reach 51 percent this year.

In 2011, market demand for flat-panel TVs is forecast to increase 11 percent, helped by strong emerging market sales. To enhance profitability, Samsung aims to increase sales of premium products such as LED, 3D and smart TVs. It will also market region-specific models along with low-cost models in emerging markets.


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