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Samsung Electronics Posts 3Q Operating Income of 2.1 Trillion Won

Samsung Electronics Posts 3Q Operating Income of 2.1 Trillion Won

Posted October. 15, 2005 07:52,   


Samsung Electronics reported third quarter (July to September) sales, operating income, and net income of 14.538 trillion won, 2.125 trillion won, and 1.884 trillion won, respectively on October 14.

“Sales of LCDs for semiconductor and mobile phones are performing modestly, but home appliances are again in the red,” a company spokesperson said.

Operating income rose 28.8 percent compared to the second quarter (April to June), but dropped 22.5 percent year on year, which shows that the IT industry’s recovery is slow.

Semiconductor sales climbed 10 percent compared to the previous quarter thanks to soaring demand for NAND flash memory used in MP3 players and robust personal computer sales.

The operating margin (operating income over sales) of Samsung’s semiconductor business, the profitability indicator, however, stood at 29 percent, a big drop from the third quarter last year (41 percent).

The figures were collected from the head office of Samsung Electronics, and the domestic and overseas offices of Hynix Semiconductor. Samsung Electronics’ quarterly operating margin was lower than that of Hynix (31 percent) for the first time.

In the information and communication business field, quarterly sales of mobile phones set a new high at 26.8 million, but operating margin was a mere 12 percent because of intensified market competition.

Samsung Electronics expects its sales to exceed 100 million-mark this year with increases in overseas sales of “Blue-Black Phones” and third generation handsets.

In the LCD department, the defect rate of the company’s seventh generation production line dropped while demand increased, which drove up sales by 26 percent from the second quarter, and operating income to 300 billion won.

The electronics giant anticipated an overall supply shortage as demand for the fourth quarter (October to December) rose by 7 percent with the year-end peak season coming up.

The company’s operating deficit in its digital media business improved slightly from 50 billion won in the second quarter to 20 billion won in the following quarter. The firm said the performance was actually a surplus, citing that overseas production accounted for 90 percent of the total.

Sales in home appliances were down 15 percent from the second quarter, and operating income suffered a deficit of 40 billion won as sales volume decreased significantly with the high season for air conditioners now over.

“The decision on building a semiconductor plant in the U.S. will be made shortly,” said IR managing director of Samsung Electronics, Chu Woo-shik. “In the LCD department, we are reviewing other plans from various perspectives, including investment in eighth generation lines and investment expansion with Sony.”

Do-Young Kim nirvana1@donga.com