Samsung Electronics has reported record quarterly operating profits thanks to what it said were significant improvements in its components business.
Operating profit for the second quarter stood at 5.01 trillion won (US$4.2bn), while the group posted net income for the quarter of 4.28 trillion won (US$3.6bn), up over 83pc on the same period in 2009.
Group revenues rose by 17pc year-on-year to 37.89 trillion Korean won.
Samsung said its semiconductor business recorded an operating profit of 2.94 trillion won on sales of 9.53 trillion won, while its LCD Business generated an operating profit of 880 billion won on 7.76 trillion won in sales.
The group also said its set businesses – spanning digital media, IT solutions and telecommunications – also performed well despite increased price competition and uncertain global consumer sentiment.
In flat-panel TVs, for which it is the world’s largest manufacturer, Samsung said it shipped 9.02 million units, up 43pct year-on-year due to strong growth in developing markets.
“In the second quarter, our component businesses performed very strongly, yet it was a more challenging quarter for our set businesses,” said Robert Yi, vice-president and head of Samsung Electronics’ Investor Relations Team.
However, Yi warned that Samsung may struggle to maintain its current profit levels in the future: “With intensified competition throughout the digital media and mobile industries going forward, it may become a challenge to maintain current profitability levels. However, we will continue to focus on introducing differentiated products and widening our technology leadership in components to meet these difficult market conditions.”
Samsung said strong seasonal demand for core components will drive its performance in the third quarter, although increased market supply is also forecast. The company is also forecasting that continued price competition in its set businesses will put downward pressure on profit margins in the third quarter.
Article courtesy of Businessandleadership.com