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Samsung Reports Lower Q2 CE, Cellphone Sales

Seoul, South Korea – U.S. market conditions and the SARS outbreak in China weighed heavily upon sales of mobile handsets at Samsung Electronics, with dollar volume falling 8.2 percent in the second quarter, to $2.4 billion, compared with the preceding three months, when sales reached $2.6 billion.

Samsung sold 12 million handsets in the second quarter, below the 13 million it had predicted earlier. However, the company has set its sights on over 13.2 million handset sales in the third quarter, which would help it exceed its target of 52.5 million mobile phones moved over the 12 months.

Despite lower handset sales, Samsung’s information and communications segment, which includes cellphones, registered sales of $2.7 billion, up about 12 percent from the $2.4 billion recorded in the second quarter of 2002, but down 4.6 percent from the $2.9 billion reported in the preceding quarter. The telecommunications segment accounted for 32 percent of total Samsung sales in the second quarter, its second largest business.

Operating income in the information and communications segment came in at $470.9 million in the second quarter, and the segment accounted for 47 percent of overall company operating income in the three months. Segment operating income was $582.1 million in the preceding three months. Profit margin was 17.3 percent in the second quarter, compared with 20.4 percent in the first.

The digital media segment, which includes digital televisions, DVD players and computers, recorded $1.58 billion in second quarter sales, a drop-off of about 25 percent from the $2.1 billion reported in the same three months a year ago, and 1.3 percent below the $1.60 billion in the previous quarter. The digital media segment accounted for 19 percent of Samsung total sales in the second quarter. LCD revenue in the second quarter hit $938.9 million.

Second quarter operating income for the digital media segment reached $34.2 million, compared with $85.6 million in the preceding quarter. Profit margin was 2.1 percent in the second quarter and 5.4 percent in the first.

Consolidated Samsung second quarter revenue reached $8.4 billion, down about 2.5 percent from the $8.6 billion notched in the second quarter last year, but up about 2.5 percent from the $8.2 billion recorded in the preceding quarter.

First half consolidated sales hit $16.6 million, flat when compared with the same six months in 2002.

Export sales in the second quarter hit $6.43 billion, up 0.9 percent from the preceding quarter when export sales came in at $6.40 billion. Export sales for the first half were $12.8 billion, compared with $11.7 billion year-on-year.

Consolidated operating income for the three months was $993.1 million, down substantially from the $1.6 billion reported year-on-year, and off 14.1 percent from the $1.2 billion recorded in the preceding quarter. Operating profit for the first half was $2.1 billion, down from $3.5 billion in the first half of 2002.

Consolidated net income hit $967.4 million, a drop from the $1.7 billion recorded in the second three months a year ago, and off 0.2 percent from virtually the same amount in the preceding quarter of this year. In the first six months, net profit reached $1.9 billion, down from $3.3 billion year over year.

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