Samsung posts record quarterly profits

Samsung Electronics posted a record operating profit of 6.72 trillion won in the second quarter, up 79 percent from a year ago, on the back of stellar smartphones sales.

The technology giant said that its second quarter sales also rose by 21 percent to an all-time high of 47.6 trillion won. Its net income reached 5.19 trillion won, up 48 percent from a year ago.

The firm’s information technology and mobile division drove the strong performance. Operating profit for the division jumped 145 percent to 4.19 trillion won.

“Based on differentiated products and competitiveness in technology, we achieved our highest quarterly profit despite a difficult business environment caused by the European financial crisis,” the company said in a statement.

“Revenue and operating profits rose in information technology and mobile division thanks to the sales expansion of high-end smartphones.”

More than 10 million Galaxy S3 smartphones have been sold since being released in May, according to Shin Jong-kyun, head of Samsung Electronics’ mobile division.

The company said in a conference call that it was “preparing a smartphone for Microsoft’s Windows 8 operating system.

Market analysts expect the company will continue to show a solid performance, powered by strong sales of smartphones.

“Galaxy S3 sold 6.8 million smartphones by our estimate in the second quarter,” said Greg Roh, analyst at HMC Investment Securities over the phone. “It hopes to sell 19 million in the third quarter and 12 million in the fourth.”

Sales of other low priced handsets sales will also rise thanks to the increase in demand in emerging markets, such as China, to total 57 million for the third quarter and 60 million for the fourth in total global mobile phones sales, he said.

The Korean company and its California-based counterpart are the only two firms showing a growth in the handset business, while other major powerhouses such as Nokia, LG Electronics and HTC are seeing their market shares plummet.

“Despite sluggish demand, Samsung Electronics’ operating profit is superior to its competitors,” said industry analyst Thomas Kang, who consults for businesses in Hong Kong, by telephone. “When the world economy gets better, their numbers will improve for the third and fourth quarter, showing 10 percent growth in revenue and operating profit per quarter.”

The display panel division swung back to the black and saw 750 billion won in operating profit. The semiconductor sector saw a slight decrease of 6 percent to mark 8.6 trillion won due to the lower demand for chips from Europe, but was better than market expectations.

Kang said the slight setback in display panels and chips were also “solid,” and that the firm had managed its output “surprisingly” well. “It won’t see a significant increase like mobile phones, but the difficult time is over. It won’t get any worst, compared to Elpida and other Japanese LCD (liquid crystal display) businesses.”

Samsung Electronics’ traditional cash-cows should recover in the second half and the peak season for home appliances will also boost demand for NAND flash and DRAM (dynamic random access memory). A decrease in its competitors’ supplies will also be good for the company, said the analyst.

“Though we manufactured more than we needed, Toshiba’s lowered production of NAND flash will boost our sales and distribution of chips in the third and fourth quarters,” said the company. <The Korea times/Cho Mu-hyun>

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