Samsung Announces Q2 Earnings
Jul 19, 2005
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Samsung Electronics Co., Ltd. announced its financial results for the second quarter of 2005. The company recorded sales of 13.59 trillion won (approx. U.S. $13.1 billion), operating income of 1.65 trillion won (approx. $1.6 billion), and net income of 1.7 trillion won (approx. $1.6 billion), representing a 2 percent drop, 23 percent decrease, and 13 percent rise, respectively, from the previous quarter.

Despite a drop in prices of some of its main products, such as memory chips, the company was able to maintain sales of more than 13.5 trillion won (approx. $13 billion) due to the growth of the LCD and Digital Appliance Businesses. While operating profits decreased, net income rose because of gains from Samsung Card's turnaround, which was incorporated through valuation using equity method of accounting.

Sales and operating income of the Semiconductor Business decreased slightly to 4.2 trillion won (approx. $4 billion) and 1.1 trillion won (approx. $1 billion), respectively, because of a seasonal decline in DRAM and NAND flash memory prices. However the business continued to maintain high margins of over 26 percent, and the company expects improved performance in the second half with stronger demand for PCs. In addition, a boost in demand for high capacity NAND flash memory is expected with the introduction of new MP3 players and digital cameras with higher pixel counts.

The Telecommunication Network Business posted sales of 4.5 trillion won (approx. $4.3 billion) and operating income of 530 billion won (approx. $509.7 million), representing a decrease of 8 percent and 37 percent, respectively. The drop is attributed to increased marketing spend to counter growing competitiveness. Samsung sold 49 million phones in the first half despite a stagnant domestic market and slow-down in the growth of the overall mobile phone market. The company expects stronger performance in unit sales and ASPs in the third quarter with the launch of new premium products.

The LCD Business reported revenue and operating income figures of 2.1 trillion won (approx. $2 billion) and 12.7 billion won (approx. $12.2 million), respectively. The company expects its performance to improve in the third quarter as demand for LCDs increases. Plans for the full ramp-up of S-LCD's seventh generation line are on schedule, which will contribute to the increased sales of 32-in and larger LCD TV panels.

Digital Media Business sales decreased to 1.6 trillion won and posted a 50 billion won (approx. $48.1 million) operating loss because of the seasonal downturn. Sales of its Digital Appliance Business grew 27 percent to 1 trillion won (approx. $961.7 million) and operating income at 30 billion won (approx. $28.9 million) returned to the black from increased sales of air-conditioners.

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