Samsung, Facility Investment of 8.8 Trillion Won for Next Year

Samsung Group will plan to execute the facility investment of 8.8 trillion won next year.

The corporate restructuring office of Samsung said on December 24, that there are 8.8 trillion won for the facility investment increased by 35% over 6.5 trillion of the year. Also, it decided to invest 4.3 trillion won increased by 16% over 3.7 trillion won of the year for expenses of research and development.

Despite unstable foreign and domestic conditions such as an obscurity of US economy and a deepening of trade trouble and the instability of the international financial market, Samsung plans to increase the R&D expenses and facility investments because it has strategies to gain a competitive advantage through intensive investment on the major business.

As the major investments, there are an establishment of TFT-LCD 5G 6Line and the semiconductor 300㎜(12inch) 12Line of Hwaseong factory, Gyeonggi-do, and the expansion of the next generation display such as PDP and mobile phone factory line. The facility investment of affiliates including Samsung Electronics, will exceed 7 trillion won and occupy 90% of the total of Samsung group.

Lee Geong-hee, president of Samsung said, “As the business is depressed more, there is a large investment. We have to differentiate from the competitors. He explained, “We will move up an activation of domestic business, and increase the facility investment of the strategic field to gain the absolute competitive advantage in the major business.”

However, the business plan of the next year will be conservative as it specified the estimated exchange rate as ‘USD 1=1,100 won’. The sales and net profits are estimated at a level of the year respectively.

Besides, Samsung Group achieved the maximum business results with the sales of 137trillion won, income before tax of 15 trillion (based on 25 major affiliates). Compared with last year, the sales and the income before tax increased by 10% and 127% respectively. Also, it was forecasted that Samsung could occupy 20% of total exports (USD 160) by achieving the exports of USD 31.2 this year. Samsung determined the exports goal of the next year as USD 36.5 billion increasing 17% over the year, in the meeting held on December 21 and extended the business strategy for achieving it by affiliates.

A debt ratio decreased to 65% at the end of the year from 366% as of the end of 1997, and will drop to 56% next year.

Yeon-Su Shin ysshin@donga.com