SEOUL, KOREA - Samsung Electronics Co., Ltd. today announced financial results for the third quarter ended September 30, 2014. Samsung’s revenue for the quarter was KRW 47.45 trillion, a 9 percent decrease quarter-on-quarter (QOQ), while the operating profit for the quarter was KRW 4.06 trillion, a decrease of KRW 3.13 trillion QOQ.
In the company’s earnings guidance disclosed on October 7, Samsung estimated third quarter consolidated revenues would reach approximately KRW 47 trillion with consolidated operating profit of approximately KRW 4.1 trillion.
Despite a marginal increase in sales volume, the IT & Mobile Communications (IM) Division saw earnings fall for two consecutive quarters, as smartphone average selling price (ASP) declined due to reduced prices for older models and increased sales of middle-end smartphones. Meanwhile, the Consumer Electronics (CE) Division fell short of expectations, due to ASP decline of TVs and an earlier-than-expected end to the peak season for air conditioners.
Looking ahead to the fourth quarter, Samsung cautiously expects an earnings increase, driven by strong seasonal demand for TVs and continued growth momentum for the Memory Business. In particular, the company expects increased market demand to improve earnings for the System LSI Business and the Display Panel segment. Although the company anticipates a demand growth for the recently launched Galaxy Note 4 and new middle-end smartphone models, uncertainty remains for the IM Division, due to the year-end surge in competitor smartphone launches, which may require a potential increase in marketing expenses associated with year-end promotions.
Capital expenditure (CAPEX) in the third quarter totaled KRW 4.3 trillion, as KRW 2.4 trillion and KRW 1.2 trillion were spent on the Semiconductor Business and the Display Panel segment, respectively, bringing the year-to-date CAPEX to KRW 14.5 trillion. In sum, Samsung expects its 2014 CAPEX to total mid KRW 24 trillion by the end of the current fiscal year, which is at par with a previously announced guideline. Meanwhile, the company’s selling, general and administrative (SG&A) expenditures, which include marketing expenses, decreased by approximately KRW 800 billion QOQ.
By Yeoun Je-hyun(joyjh@koreaittimes.com)
