Samsung Electronics, the world’s largest maker of memory chips and flat-screen televisions, reported record second-quarter profits yesterday as revived global demand pushed up memory chip prices.
South Korea’s largest firm said consolidated net profit in the period between April and last month was at an all-time high of 4.28 trillion won (US$3.6 billion), an 83 percent rise from a year earlier.
Operating profit of 5.01 trillion won was also a record and up 88 percent from the second quarter of last year. Revenue rose 17 percent to 37.89 trillion won.
The stellar result was fuelled by renewed worldwide demand for personal computers and smartphones, which pushed up prices of key components such as memory chips and LCD panels.
Samsung’s semiconductor business achieved 2.94 trillion won in operating profit in the second quarter, some 60 percent of the total, with a profit margin of 31 percent.
The figure was almost eight times the 340 billion won operating profit posted a year earlier. Its LCD business recorded an operating profit of 880 billion won, a profit margin of 11.3 percent.
Samsung Electronics, the world’s second-largest mobile phone maker after Finland’s Nokia, earned 630 billion won from mobile handsets and network business. The profit margin was a lower-than-expected 7.2 percent due to falling prices for regular mobile phones and promotional costs for new smartphone models.
“In the second quarter, our component businesses performed very strongly, yet it was a more challenging quarter for our set businesses,” Robert Yi, head of Samsung’s investor relations team, said in a statement. “With intensified competition throughout the digital media and mobile industries going forward, it may become a challenge to maintain current profitability levels.”
The company said strong seasonal demand for core components would drive its performance in the third quarter, although increased market supply was also expected.
It forecast that continued price competition in set businesses would lower third-quarter profit margins.
Samsung said an oversupply in the memory chip market is inevitable as global suppliers prepare to raise production in the second half of this year. “Profitability may weaken as DRAM prices are expected to decline in the second half and 2011,” Cho Nam-sung, head of the company’s memory marketing team, said in a conference call. “Prices will decline in Q3 and more in Q4.”
In Japan, Hitachi Ltd, a maker of everything from home appliances to nuclear reactors, returned to profit last quarter as strong Asian demand fueled recovery in the auto and electronics sectors.
The company said yesterday it booked a net profit of ¥86 billion (US$989 million) for April through last month compared with a loss of ¥82.7 billion a year earlier.
Revenue rose 13.7 percent to ¥2.15 trillion, while operating profit came to ¥88.5 billion. It posted an operating loss of ¥50.6 billion the previous year.
Hitachi joins other major Japanese electronics companies in reporting dramatic turnarounds. On Thursday, Sony Corp, Panasonic Corp and Toshiba Corp were among those that posted robust profits after deep losses last year.
The company said it sold more chip-related manufacturing equipment, construction machinery, automotive systems and consumer electronics. Hitachi raised its outlook for the first half through September. It now expects a net profit of ¥100 billion compared with ¥55 billion previously forecast.
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