The South Korean company forecast that earnings may decline in the current quarter due to the stronger won and rising marketing expenses. But it expected earnings to improve next year as the global economic recovery drives demand growth.
The company plans to increase its capital expenditure in 2010 to ride on the industry’s recovery. It plans to spend more than Won5,500bn ($4.65bn) on memory chips and about Won3,000bn on liquid crystal displays. Its capital spending this year is estimated to reach more than Won7,000bn, including Won4,000bn on semiconductors and Won2,000bn on LCDs.
Net profit tripled to Won3,723bn in the July-September period from Won1,219bn a year ago on higher chip prices and strong sales of flat-panel TVs and mobile phones. Sales rose 29 per cent to Won24,862bn.
The company’s main businesses were all highly profitable, with its operating profit margin of semiconductors and LCDs reaching 15 per cent and that of its telecommunications division standing at 10 per cent.
The semiconductor business is expected to continue its resurgence on rising demand and limited supplies. Kwon Oh-hyun, Samsung’s head of semiconductor business, said earlier this week that small shortages are expected for both D-Ram and Nand flash memory chips next year.
Samsung is expected to benefit most from the recovery thanks to its widening technology gap with rivals in Japan and Taiwan. The company aims to increase its semiconductor revenue by more than 50 per cent in three years from the estimated $16.6bn this year to $25.5bn in 2012.
The company’s LCD business reported operating profit of Won1,010bn as the industry faced supply shortages. Samsung’s flat-panel TV sales increased 24 per cent from a year ago, driven by strong demand from China and the increasing popularity of its premium LED-backlit TVs.
Samsung sold 60.2m units of mobile phones in the third quarter on strong demand for its touch-screen phones in advanced markets. The company estimated its global market share increased to 20.8 per cent from 19.2 per cent in the second quarter. Samsung plans to strengthen the fast-growing smart phone business, which has been cited as its relative weakness, by launching various models including phones that run on Google’s Android operating system.
Samsung’s shares were up 1.81 per cent at Won731,000 in morning trade after hitting a record high last month.
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