Telecom powers Samsung to post 7% increase in revenue at KRW 165 trillion in 2011

By Telecom Lead Team: Samsung Electronics posted revenues of KRW 47.3 trillion in
Q4 2011, a 13 percent increase year-on-year.


Consolidated net profit for the
quarter was KRW 4 trillion.


Samsung’s full year 2011 revenue was
KRW 165 trillion, up 7 percent from the previous year.


Net income registered KRW 13.73
trillion, down 15 percent compared with 2010.


The telecommunications businesses
reached quarterly earnings of KRW 17.82 trillion, up 52 percent from the
previous year, with growth mainly driven by strong sales of Samsung’s GALAXY S
II and GALAXY Note. Operating profit for the businesses also hit a record KRW 2.64
trillion on-quarter.


The telecommunications businesses
including mobile communications and telecommunication systems posted a
quarterly operating profit of KRW 2.64 trillion for the period. Fourth
quarter revenue reached KRW 17.82 trillion compared with KRW 11.75
trillion for the same period of 2010. The stellar performance has allowed
Samsung to register full year 2011 operating profit of KRW 8.27 trillion,
up 90 percent on-year. Total sales for fiscal year 2011 hit KRW 55.53
trillion, accounting for almost one-third of Samsung Electronics’ total revenue
for the year.


Samsung’s flagship GALAXY S II
smartphone and its high-end mobile devices, such as the GALAXY Note and the
GALAXY Nexus, and entry-level models drove up revenue for the year by almost 40
percent compared with the previous year. Shipments of Samsung smartphones rose
by approximately 30 percent in the fourth quarter, compared with the previous


For the global market outlook for
this year, demand for entry-level smartphones and tablet PCs will increase
significantly, while the growth momentum for feature phones is expected to stay
static. Emerging markets and the spread of LTE (Long-Term Evolution) wireless
telecommunications technology have also contributed to the growth of the
smartphone market, which is expected to grow by more than 30 percent. 


The telecommunication system
business will further solidify its leadership in the wireless network market
with the expansion of the LTE service in Korea and North America.


Despite intensified competition
amid the global economic slowdown, our Telecommunications businesses continued
to post solid earnings with an enhanced line-up of high-end smartphones,
resulting in higher average selling price. Moreover, improved profitability and
earnings growth of our Set businesses, including smartphones and flat panel TVs
led to our company’s strong earnings,” said Robert Yi, senior vice president
and Head of Investor Relations at Samsung.



Samsung attributed the solid
performance to its differentiated technology, cost competitiveness, targeted
marketing activities and supply chain management (SCM) capabilities throughout
all business units.


The semiconductor business saw
demand for PC DRAM remain weak but growth of specialty products such as server
and mobile DRAM was constant due to the rising demand for smartphones and
tablet PCs. Although profitability for memory chips and LCD declined, rapid
growth in system LSI and OLED panels was a promising signal for future growth.


In 2012, capital expenditure is
forecast to amount to KRW 25 trillion, in which KRW 15 trillion will
be invested in the semiconductor business that consists of memory and system
LSI. Of the total Capex planned for this year, KRW 6.6 trillion will be
allocated for investment in the Display Panel segment, which encompasses LCD
Business and subsidiary Samsung Mobile Display.


Last year, Samsung executed a total
of KRW 23 trillion in investments, including KRW 13 trillion for
semiconductor business and KRW 6.4 trillion for the DP segment. Capex for
the fourth quarter was around KRW trillion.


Samsung’s semiconductor business –
including Memory and System LSI – posted revenue of KRW 9.17 trillion, a 1
percent decrease year-on-year. For the full year 2011, the chip unit registered
KRW 7.34 trillion in operating profits on revenue of KRW 36.99


The semiconductor business sustained
profitability in the quarter, amid weak market demand, thanks to a mix of
high-margin products such as servers and Solid State Drives (SSDs) and robust
demand for NAND chips used in mobile devices such smartphones and tablet PCs.


For the year, Samsung plans to
secure price competitiveness in the market through differentiated mobile and
server DRAM products by expanding 30nm-class and below processes. In the case
of NAND, the company will focus on securing profitability by consistently
expanding 20nm-class processes. Investment in system LSI will be expanded to
proactively respond to the rising demand for application processors and image


Samsung will look to secure growth
in 2012 with a differentiated product mix, including tablet, 3D and LED
television panels, while strong demand for smartphone display panels is
forecast to continue.


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