Samsung Electronics`s Profit Reduced By 63%

In the aftermath of the world`s semiconductor business slump, the Korea`s best company, Samsung Electronics, saw the decline of the operation profit in the second quarter of this year (April-June), down 63 percent from the first half.

As the profitability went down, the Samsung Electronics decided to revise the facility investment plan in the semiconductor sector and thus reduce the total investment amount from 6 trillion 100 billion won to 5 trillion 100 billion won.

Samsung`s worsened operation results and its reduction of the facility investment are likely to have large impact on our economy in the second half with the overall economic slump.

Samsung announced the operation results in the investor relations (IR) yesterday in the Korea Stock Exchange (KSE) in Yoido, Seoul. According to the announcement, Samsung recorded ▲sales of 8 trillion won (exports 5 trillion 100 billion won, domestic sales 2 trillion 900 billion won), ▲ profit before taxation of 950 billion won, and ▲operation profit of 600 billion won. And the net profit, excluding the tax, amounted to 880 billion won.

The total sales and the profit before taxation of the Samsung Electronics declined by 7 percent and 39 percent respectively, and its operation profit dropped by 63 percent from the first quarter. As a result, the Samsung Electronics recorded the operation results in the first half of this year that while the total sales increased by 2 percent, the profit before taxation fell by 42 percent year-to-year. Its total sales and profit before taxation amounted to 16 trillion 600 billion won and 2 trillion 500 billion won respectively in the first half.

By business sector, the communication sector recorded the total sales of 2 trillion 300 billion won and the operation profit of 300 billion won, exceeding over the ailing semiconductor sector by the decline of the D-ram price (total sales of 2 trillion 200 billion won and the operation profit of 260 billion won).

Especially, because its second quarter operation profit plummeted by 75 percent from the first quarter, the semiconductor sector, which has been the major profit source, is likely to turn into the red from the second half unless the imbalance of supply and demand in the world`s D-Ram market is solved.

Meanwhile, regarding the assertion that the semiconductor sector recorded the deficit in June, the Samsung Electronics told that ``the semiconductor made a operation profit even in June``.

The Samsung declared to the institutional investors that they may consider the reduction of production if other companies begin the full-scale reduction of production, but there is no reduction plan yet.

parkwj@donga.com