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Samsung Electronics posts record profit

A showroom guide at Samsung Electronics walks past a display of memory chips made by the firm at its headquarters in Seoul on Thursday. PHOTO: REUTERS

Samsung Electronics yesterday announced a record quarterly net profit as demand for its flat-panel TVs, mobile phones and chips rose in an improving global economy.

South Korea’s biggest company said net profit more than tripled in the third quarter to 3.72 trillion won (US$3.13 billion), from 1.22 trillion won in the same period last year.

Sales on a parent-level basis rose 29 percent year-on-year to 24.86 trillion won from 19.26 trillion a year earlier, while operating profit rose to 2.767 trillion won from 1.023 trillion won.

Samsung is the world’s biggest maker of computer memory chips and flat-screen TVs and the second-largest mobile phone manufacturer behind Finland’s Nokia.

Vice president Robert Yi forecast a solid fourth quarter supported by seasonal demand for consumer electronics, but said the won’s rise and increased marketing expenses could lead to a quarter-on-quarter decline in profit.

“Samsung has made great progress in strengthening its market leadership throughout 2009, and we believe the outlook is positive for further growth as the global economic recovery continues into 2010,” he said in a statement.

On a consolidated basis including overseas subsidiaries, operating profit for July-September was 4.23 trillion won compared with 1.48 trillion won a year earlier. Sales reached 35.87 trillion won compared with 30.27 trillion the same period last year.

Analysts said the outstanding performance would not be sustained in the current quarter because the firm normally spends more on marketing in the last quarter.

The won’s rise on currency markets also means that South Korean exports would be less competitive in price terms than foreign competitors, they said.

“The chip sector will likely remain strong in the fourth quarter, but falling LCD panel prices and higher marketing costs on handsets and TVs on top of a drop in the dollar-won exchange rate will narrow operating profit,” said Seo Won-seok, an analyst at NH Investment & Securities.

Samsung, however, said a weak dollar would not have a significant impact since it accounts for only 50 percent of its exchange position. It said a strong euro and yen would allow it to remain price competitive.
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