Samsung Electronics Co., Ltd. : Samsung Electronics Posts Record 2nd-Quarter Net On Mobile-Device Strength
07/26/2012| 08:05pm US/Eastern
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By Jung-Ah Lee
SEOUL--Samsung Electronics Co. (005930.SE, SSNHY) Friday reported a record second-quarter net profit as its mobile devices continued to sell well even though consumer spending was hit by the struggling global economy during one of the slower times of the year for technology companies.
Samsung, the world's largest technology firm by revenue, said its net profit for the three months ended June 30 rose to a record 5.193 trillion won ($4.5 billion), up 48% from KRW3.506 trillion a year earlier. In the first quarter, Samsung reported a net profit of KRW5.05 trillion.
The result was lower than the average forecast for net profit of KRW5.6 trillion in a Dow Jones Newswires poll of seven analysts.
Samsung, which has a market value of about $170 billion, attributed its best-ever second-quarter net figure to demand for its hot-selling mobile devices, including high-margin smartphones, combined with stellar sales of its ultra-thin displays. This helped total sales to rise 21% to KRW47.6 trillion from KRW39.44 trillion, with Samsung able to overcome sagging consumer sentiment in a quarter that is usually quieter for technology companies, which typically experience increased demand during year-end shopping sprees.
Operating profit jumped 79% to a record KRW6.724 trillion, from KRW3.752 trillion a year earlier.
Analysts expect the technology company to see an even better performance in the coming quarters, as Samsung's smartphone earnings, which account for more than 50% of its operating profit, will remain a strong contributor to the bottom line.
"The mobile division, which alone will see an operating profit of KRW4.8 trillion in the third quarter, was helped by sales of [the company's new] Galaxy S III smartphone, and it will lead the firm's overall growth," said Y.B. Oh, an analyst at Hanmag Securities. "The chip division will also register yet again its biggest profit of around KRW1.6 trillion [in the third quarter] as chip prices are expected to stabilize due to new product releases."
Earlier this month, Samsung had forecast a second-quarter consolidated operating profit of between KRW6.5 trillion and KRW6.9 trillion on sales of between KRW46 trillion and KRW48 trillion.
However, risks remain, analysts said, including in the fiercely competitive but highly lucrative smartphone market.
Weakening demand from Europe could result in slowing sales growth of high-end smartphones, analysts said. In addition, the expected launch of Apple's new iPhone in the third quarter could result in some demand switching away from Samsung's models, they added. Meanwhile, ongoing legal disputes with Apple could be an issue.
Write to Jung-Ah Lee at jung-ah.lee@dowjones.com
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