By Claire Reilly
Samsung has announced its third quarter results for the period ended 30 September 2011, with the company posting a grim 23 per cent decrease in net profits year on year, despite a spike in the profitability of its smartphones.
Sales for the third quarter were up 3 per cent, reaching 41.27 trillion won – equivalent to AUD $35 billion. Of this, the company made 3.44 trillion won in net profits (AUD $2.9 billion) down from 4.46 trillion won for the same period last year.
When the company’s sales figures are broken down into product segments, a clearer picture of Samsung’s strong points becomes apparent. Mobile telecommunications sales were up 39 per cent year on year, reaching a figure of 14.42 trillion won compared to 10.38 trillion in 2010. Digital media and appliances (DM & A) also held steady, falling by 0.4 per cent to 14.36 trillion won. This equated to profit hikes of 6.2 per cent and 3.4 per cent in the respective categories.
Samsung’s largely business-to-business Semiconductor and Display Panel segments performed less favourably. Semiconductor sales and operating profit fell by 11 per cent and 15.3 per cent respectively year on year, while display panels saw a 13 per cent fall in sales figures and a 7.7 per cent fall in operating profits.
Speaking about the company’s results was Samsung vice president and head of investor relations Robert Yi.
“Despite the difficult business environment due to the economic slowdown in developed markets, Samsung achieved a solid performance and recovered its double-digit operating profit margin in the quarter, driven by strong sales of our smartphones,” he said.
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“In anticipation of explosive growth in the mobile market, we have been focusing on fostering growth of certain component businesses, such as Mobile DRAM, application processors, NAND and OLED panels. These industry-leading technologies, combined with our design and software capabilities, have enhanced the competitiveness of our set products.”
The mobile telecommunications category was clearly the winner over the last quarter, with the company predicting it will remain strong going into 2012.
“Samsung expects strong seasonal demand to drive sales of its diverse portfolio of smartphones in the fourth quarter assisted by the launch of new premium devices, including Galaxy Nexus which features the latest Android 4.0 operating system for the first time in a smartphone, and the 5.3-inch Galaxy Note which is opening a new mobile device category. Strong demand in developed countries will sustain tablet growth in the quarter.”
Samsung also predicted growth in its digital media and appliances businesses into the next quarter – including visual display, IT solutions, digital imaging and digital appliances product categories – with a 30 per cent increase in demand compared to this quarter.