Samsung Electronics posts record Q2 profits

Net reaches $4.5b as smartphones remain growth driver, but chip profits continue slide


Samsung Electronics, the world’s largest tech company in terms of revenue, posted record earnings in the second quarter of this year, despite the global economic slowdown.

The tech giant posted net profit of 5.2 trillion won ($4.5 billion) from April to June this year, up 48 percent from 3.5 trillion won a year earlier. Its operating profit reached 6.7 trillion won, up 79 percent from 3.8 trillion won, with revenue of 47.6 trillion won, up 21 percent from 39.4 trillion won a year ago.

The growth is largely attributable to robust sales of the company’s flagship Galaxy smartphones, as expected from its pre-earnings guidance early this month.

The company’s mobile communication business, its main growth driver, achieved sales of 20.5 trillion won, the largest among all divisions, due to the “successful launch of its Galaxy S3 and Galaxy Note,” it noted.

Although Samsung expects to see continued growth on increasing demand for smartphones and displays toward the year-end holiday season, the company remained cautious due to the financial crisis in Europe, one of the biggest export destinations for Korean corporations.

“As we move into the second half, continued fiscal instability in Europe and its effect on the global economy will result in the possibility of a slower-than-expected recovery and intensified market competition,” said Robert Yi, senior vice president and head of investor relations of Samsung Electronics.

Kim Hyun-joon, vice president of mobile communications, said that it expects sales of mobile handsets to increase about 10 percent in the third quarter.

Its semiconductor business continued to face a downturn, with operating profit decreasing 38 percent to 1.1 trillion won in the second quarter due to a “price decline of major memory products ― both DRAM and NAND,” said Yi during an IR conference call.

However, Kim Myung-ho, vice president of semiconductor division, said that the firm expects to see positive results in the latter half of this year as Japan-based Toshiba’s planned production cut of its NAND memory chips will improve the market.

Its display panel business made a rebound, posting 750 billion won in operating profit in the second quarter, from a loss of 210 billion won a year earlier on “strong demand for tablet PC panels.”

It expects the global economic uncertainty will further cast a shadow over the notebook and personal computers market. Samsung Electronics will overcome this obstacle by “expanding sales of LCD and OLED panels for smartphones,” it said.

It invested some 14 trillion won for chip and display businesses in the first half of this year, and will invest up to 25 trillion won for fiscal 2012 as planned.

By Park Hyong-ki (hkp@heraldcorp.com)