By Kim Da-ye
Samsung Electronics, the world’s largest semiconductor maker, posted a record total revenue of 40.23 trillion won for the third quarter while its operating profit dropped from the previous quarter below the five-trillion-won mark, it reported Friday.
The electronics giant said that despite the tough business environment amid poor demand for many of its key products, the earnings remained healthy thanks to its semiconductor business, which achieved record sales of 10.66 trillion won in the third quarter and touted a profit margin of 32 percent, and the launch of its line of smartphones.
Samsung, however, forecasts its earnings to fall in the fourth quarter because of price drops in memory semiconductor products due to oversupply in the market and decline in the prices for liquid crystal display (LCD) panels. Robert Yi, head of the firm’s investor relations team, added that the appreciation of the Korean won will put downward pressure on the fourth quarter earnings.
The firm’s third quarter earnings on a consolidated basis were, in general, robust. Its revenue grew 6.2 percent from 37.89 trillion won in the second quarter ― the then record revenue ― to 40.23 trillion won, and net profit rose 4.17 percent to 4.46 trillion won. The operating profit dropped three percent from 5.01 trillion won to 4.86 trillion won though it was a 15.22 percent increase from a year earlier.
“Provisions for various patent-related expenses totaling 230 billion won were reflected in the third quarter earnings. Without these provisions, operating profit would have been close to 5.1 trillion won,” said the company in a statement.
The sales for the memory division reached 7.49 trillion won, accounting for 18.6 percent of the total revenue ― up 60 percent from a year earlier ― thanks to cost competitiveness and strategic investments, said Samsung Electronics.
The second strongest division, the mobile communication business, saw 71.4 million handsets selling during the third quarter ― a 19 percent increase from a year earlier. Executives said that Samsung has so far sold about seven million units of its flagship smartphone Galaxy S and forecasted sales of 10 million by the end of the year.
In other major sectors, the LCD business and the digital media business, performed poorly ― the company blamed a slump in demand in developed countries.
Samsung said that demand for television and monitor panels is expected to remain weak in the fourth quarter and that the seasonal peak in the fourth quarter for television sales will be curbed by severe price competition.
Jay Kim, analyst at Mirae Asset Securities, commented that Samsung’s semiconductor business performed better than expected but home appliances including televisions did poorly.
Kim said that a decline in the fourth quarter’s earnings has been expected, and the drop in the company’s stock price wasn’t due to the earnings release.
A share of Samsung Electronics dropped Friday 19,000 won or 2.49 percent to close at 745,000 won.
kimdaye@koreatimes.co.kr