For the quarter, the company’s consolidated operating profit reached an all-time high of KRW 5.85 trillion representing a 98-percent increase year-on-year. Consolidated net profit for the January-March period was KRW 5.05 trillion.
Samsung’s strong performance in the quarter was driven mainly by the IT & Mobile Communications (IM) segment, which is comprised of four businesses, Mobile Communications, Telecommunication Systems, IT Solutions and Digital Imaging. In particular, solid growth in the Mobile Communications business, with brisk sales of flagship GALAXY Note and GALAXY S II devices contributed to the company’s profitability.
Looking into the second quarter, Samsung expects to improve profitability in the chip business with a recovery in PC DRAM price and by expanding its new product category with mobile application processors based on 32 nanometer-class process technology. Samsung plans to also bolster its competitive edge in mobile phones with the debut of new high-end smartphones, and by reinforcing the full lineup of products and its presence in emerging markets. Capex KRW 7.8 Trillion in Q1 Capital expenditure in the first quarter was KRW 7.8 trillion, with 5.8 trillion won invested in the Semiconductor Business and KRW 1.3 trillion in the Display Panel segment.
Starting from the first quarter, the business segment financial disclosure will reflect the organizational changes, which took place in December, 2011. We will provide sales and earnings of Device Solutions, including Semiconductor and Display Panel businesses; and Digital Media & Communications, including IT & Mobile Communications and Consumer Electronics (CE) divisions.
Seasonal Factors Dampen Chip Demand
Samsung’s Semiconductor Business – including Memory and System LSI – posted an operating profit of KRW 760 billion in the first quarter. Revenue retreated to 7.98 trillion won on-year, a 13-percent decrease compared with the same period last year.
Despite adverse market conditions, Samsung’s chip business was buoyed by strong demand for server DRAM and by expanding our value-added product mix such as products based on the 30-nanometer-class and 20-nanometer-class process technologies.Increased orders for Solid State Drives (SSDs) and Embedded Multimedia Cards (eMMC) also helped the chip business to cushion the market squeeze.
Display Business Swings to Profit
Operating profit for the Display Panel Business turned around from the previous quarter to register KRW 280 billion on revenue of KRW 8.54 trillion in the first quarter.
Despite traditionally weak seasonality, continued economic stagnation in Europe, and the prolonged supply shortage in the PC industry, the Display Panel Business was able to improve profitability by expanding sales of high-end premium panels such as LED TV and 3D panels, which pushed TV panel sales up in the mid-20 percent range on-year. Increased sales of high-resolution panels for tablet PCs and OLED panels for smartphones also helped boost profit in the quarter.
Profits Propped Up by Strong Sales of Smart Devices
The IT & Mobile Communications division – including Mobile Communications, Telecommunication Systems, IT Solutions and Digital Imaging – registered quarterly operating profits of KRW 4.27 trillion for the first period. Revenue reached KRW 23.22 trillion, and the mobile unit accounted for KRW 18.90 trillion, up 86 percent year-on-year.
The Telecommunication Systems business saw growth both in revenue and operating gains due to an increase in LTE (Long Term Evolution) wireless broadband technology equipment. In the case of IT Solutions, a boost in sales of mid-to-high-end products, including PCs and printers improved quarter-on-quarter earnings.
Premium TV Sales Lift Profitability
Samsung’s Consumer Electronics businesses, which encompass Visual Display and Digital Appliances, registered an operating profit of KRW 530 billion in the quarter, up 550 percent year-on-year, on revenues of KRW 10.67 trillion.
Highlights for the quarter included an increase in sales of more than 50 percent for Samsung’s flagship 7000/8000 TV series on-year, while the Digital Appliances Business improved profitability, both on-year and on-quarter, by increasing its portion of premium product sales.