Samsung, “No Expanded Management for Next Year "

Samsung Group plans to lower or freeze a management goal for next year over the performance of the year.

On December 3, Samsung decided to lower or freeze the management target for next year over the performance in fields of sales, profits and investment as the domestic consumption has been suddenly contracted and there are many uneasy factors of domestic and foreign business. The plan of Samsung Group will have large influences on other large-sized companies.

A high official of Samsung said, “A final draft will be made in the middle of the month, but we will lower or freeze the management target for next year over the performance in fields of sales, profits, investment and personnel expenses.” It is forecasted that Samsung will increase the maximum performances including total sales of KRW 135 trillion and the income before tax of KRW 15 trillion this year. However, such a party is over.

For the facility investment, Samsung Electronics decided to decrease by 16% to KRW 4 trillion for next year from KRW 4.8 trillion. It will continue to invest in major businesses including a semiconductor 12 lines and TFT-LCD 6G production line to leave the late starters out and will decrease the new investments. Samsung Electronics also plans to raise its sales to KRW 4 trillion by mobilizing efforts of all executives and employees. However, according to the estimate which the profits will largely decrease over the year (approx. KRW 7 trillion after tax), it has made the business plan.

Other high official of Samsung said, “Because other fields except core businesses will continue to perform the corporate restructuring through separation and sale, the overall volumes such as sales and profits can decrease. In worse business situations, the expanded business plan is the chronic disease which brings about an insolvent company.” Samsung have continued the corporate restructuring such as △Sale of Yeoksam-dong office building of company of Samsung Heavy Industries, △Sale of chemical condenser business in China of Samsung Electro-Mechanics and △ Liquidation of affiliate of Samsung Electronics in USA.

Samsung will freeze up the personnel expenses and decrease the management expenses by 10%. It will plan a belt-tightening policy but will continue an investment of core business and efficient staff.

Yeon-Su Shin ysshin@donga.com