Samsung Electronics' operating profit rebounds

By Yoon Sung-won

Samsung Electronics posted 5.29 trillion won in operating profit in the fourth quarter, up from 4.06 trillion won the previous quarter which was the lowest in the last three years.

This result indicates that the fall in profits appears to have bottomed out in the third quarter.

But whether it will extend its recovery momentum remains uncertain, as its smartphone segment remains weak and is losing customers to Apple’s iPhones.

Its sales reached 52.73 trillion won, up 11 percent from 47.45 trillion won a quarter ago. The quarterly net profit stood at 5.35 trillion won, up 27 percent from the previous quarter.

It decided to pay 19,500 won per share in 2014 year-end dividends, up nearly 40 percent from a year earlier and the highest in its history.

“By raising the dividends, we expect to contribute to direct shareholder value as well as to vitalizing the depressed national economy,” Samsung Electronics’ investor relations executive director Lee Myung-jin during a conference call with investors and analysts.

In the smartphone segment, which has caused the company’s overall performance to nosedive in the third quarter last year, the company posted 1.96 trillion won sales in the last quarter, up 12 percent from the previous quarter.

The company is expected to unveil its next flagship smartphone Galaxy S6, which is likely to use Samsung’s Exynos mobile processor, at the Mobile World Congress 2015 in Barcelona, Spain, in March to regain momentum in the mobile segment.

“We have no problem in securing mobile processor supply for Galaxy S6,” Samsung Electronics’ mobile business division vice president Park Jin-young said. “We also are well preparing for supplying metal casings for our handsets.”

The company attributed the overall performance improvement to the semiconductor and display panel businesses despite fluctuating foreign exchange and oil prices.

Samsung said it has posted 2.7 trillion won operating profit in the semiconductor segment in the fourth quarter, up 35.7 percent from a year ago. This is more than half of the company’s total operating profit in the quarter.

Citing robust demand for its memory chip and 20-nanometer mobile application processor products in the peak season at the end of last year, the company said it expects that the market demand will grow further this year.

“The 20-nanometer DRAM will be at the center of our operation in the latter half this year and we will ramp up to meet our clients demands,” said Samsung Electronics’ semiconductor business director Baek Ji-ho. “We expect the DRAM market will record mid-20-percent bit growth this year and the NAND Flash market will grow more than 30 percent this year. We seek to outgrow these market averages.”

The company said that it will work to provide more LPDDR4 memory chips for all Samsung premium smartphones and will provide its 14-nanometer Exynos mobile processors for not only Samsung smartphones but also for other handset makers.

The display panel business also contributed to the favorable performance in the quarter. Samsung said it has generated 470 billion won operating profit in the quarter, up 783 percent from a quarter ago.

Samsung Display Vice President Lee Chang-hoon said, “We plan to operate manufacturing line for flexible organic light-emitting diode display panels by the second quarter of this year to meet the demand for flexible smartphones.”

The company, on the other hand, will concentrate on quantum dot and super ultra high-definition televisions and does not plan to launch organic light-emitting diode products because they are not affordable and accessible enough in the market, said Samsung Electronics’ visual display business chief Sung Il-kyung.