Samsung Electronics Co., Ltd. today announced revenues of 40.23 trillion Korean won on a consolidated basis for the third quarter ended Sept 30, 2010, a 12-percent increase year-on-year. The figure tops the previous record for quarterly revenue of 39.25 trillion won recorded in the fourth quarter of 2009.
For the quarter, the company posted record consolidated net income of 4.46 trillion won, a 17-percent increase year-on-year. Consolidated operating profit for the quarter was 4.86 trillion won.
Provisions for various patent-related expenses totaling 230 billion won were reflected to third quarter earnings. Without these provisions, operating profit would have been close to 5.1 trillion won.
In its earnings guidance disclosed on October 7, Samsung estimated third-quarter consolidated revenues would reach approximately 40 trillion won with an operating profit of 4.8 trillion won.
The company’s increased profitability in the third quarter was driven by the strong performance of its Semiconductor Business, which recorded an operating profit of 3.42 trillion won. The Mobile Communications Business also achieved solid growth with profit supported by increased sales of flagship smartphones such as the Galaxy S.
“In the third quarter, Samsung faced a challenging business environment including declining demand for PCs and TVs, along with a continued economic slowdown in developed markets such as US and Europe,” said Robert Yi, Vice President and head of Samsung Electronics’ Investor Relations Team. “Despite this, we achieved strong revenue growth and profitability, which was built upon our cost competitiveness in memory semiconductors and increased sales of cutting-edge products such as our latest smartphones.”
Looking ahead to the fourth quarter, year-end demand for TVs and mobile handsets will support continued sales growth. However, Samsung expects oversupply in the memory semiconductor market will lead to reduced pricing, while prices for LCD panel will continue to decline. The recent appreciation of the Korean won is also expected to put downward pressure on fourth quarter earnings.
Samsung also announced that total capital expenditures for the year through September 30 reached 15 trillion won, representing 83 percent of the total planned outlay of 18.2 trillion won for 2010. When including investment in subsidiaries such as Samsung Mobile Display, consolidated capex will reach 20 trillion won for the year.
Samsung Mobile Handset Sales Up 12 Percent
The telecommunication businesses – including Mobile Communications and Telecommunication Networks – posted an operating profit of 1.13 trillion won on revenue of 11.12 trillion won. The operating profit margin was 10.2 percent.
In the Mobile Communications Business, Samsung sold 71.4 million handsets during the third quarter, an increase of 19 percent year-on-year, outperforming the industry. Average sales price also increased 14 percent quarter-on-quarter. The rollout of Samsung’s flagship smartphones, Galaxy S and Wave, were the primary drivers of continued sales growth amid a global demand recovery.
Since its introduction in June, Galaxy S has been launched in 90 countries and has been selected by 210 carriers worldwide. Samsung projects sales of 10 million units by the end of 2010. The Samsung Wave, which operates on Samsung’s open smartphone platform, bada, has also shipped more than two million units in 80 countries.
The quarter was also marked by the launch of Samsung’s Android-powered Galaxy Tab, which will be available on 140 carriers globally including all four major service providers in the United States.
In the fourth quarter, Samsung aims to increase its market share and maintain double-digit operating profit by meeting seasonal demand with an enhanced product mix of mass market smartphones, full-touch phones and the Galaxy Tab.