Sat, Jan 26, 2013 - Page 15 News List

Samsung’s profit up 89%, despite fears over won

EXHAUSTED MARKET?Currency devaluation is not the firm’s only worry, as despite a bumper year the smartphone market could soon face a glut


Shares in Samsung Electronics Co fell to their lowest level in almost two months in Seoul trading yesterday after the company said the strengthening South Korean won may cut its operating profit by at least 3 trillion won (US$2.8 billion) this year.

Shares in the world’s largest maker of mobile phones, TVs and computer-memory chips dropped as much as 2.4 percent to 1,418,000 won, the lowest since Nov. 30 last year. The forecast for this year overshadowed a better-than-expected 76 percent jump in fourth-quarter profits to 7.04 trillion won.

Currency fluctuations damped earnings from selling smartphones in China and Brazil, even as demand for the firm’s low-cost Galaxy devices helped the Suwon, South Korea-based company extend its global lead over Apple Inc.

Shares in the US maker of iPhones plunged 12 percent in New York trading on Thursday after posting the slowest profit growth since 2003.

“The stronger won will obviously have a negative impact on profit, but that isn’t Samsung’s only concern,” Standard Chartered Plc analyst Sean Kim said by phone yesterday.

“Apple’s unimpressive earnings also indicate that the overall market situation is becoming more difficult,” Kim added.

The stronger won cut fourth-quarter operating profit by 360 billion won, Samsung said. The figure still rose 89 percent to 8.84 trillion won. Sales climbed 19 percent to 56 trillion won.

Samsung boosted fourth-quarter profits by a better-than-estimated 76 percent helped by sales of low-cost Galaxy smartphones to Chinese consumers unable to afford Apple’s more expensive iPhone.

Net income rose to 7.04 trillion won from 4 trillion won a year earlier, the company said in a regulatory filing yesterday.

That compared with the 6.8 trillion-won average of 31 analyst estimates compiled by Bloomberg.

“It was another strong quarter for Samsung,” said Heo Pil Seok, chief executive officer at Midas International Asset Management Ltd in Seoul, which oversees about US$5.5 billion of assets, including Samsung shares. “The question is how much more will Samsung continue boosting its market share as Apple staggers and competition from Chinese companies intensifies.”

Globally, Samsung shipped 213 million smartphones last year, compared with 135.8 million for Apple and 35 million for Nokia Oyj, Strategy Analytics said yesterday. The worldwide market grew 43 percent to 700 million.

Samsung also supplies chips for the iPhone, and it is in a global legal dispute with Apple concerning patents.

Samsung’s display division, which makes flat panels for TVs, made a fourth-quarter profit compared with a year-earlier loss.

The semiconductor unit boosted operating profit 8.4 percent to 1.42 trillion won as sales of DRAM chips for servers and mobile devices offset a slump in prices for PC DRAM caused by a global glut and slowing demand.

The company could sell 59.7 million smartphones in the first quarter of this year, double the tally of California-based Apple, Seoul-based analyst at NH Investment & Securities Lee Sun Tae said before the earnings announcement.

Samsung probably sold 63 million in the fourth quarter, Morgan Stanley said.

Apple shipped 47.8 million iPhones in the same period, boosted by a new model and holiday-season demand.

Samsung does not provide shipment data.

“The shipment gap over Apple will get wider and wider,” Lee said.

This story has been viewed 1800 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top