Seoul: Samsung Electronics, the world’s top maker of memory chips and LCD screens, reported its best quarterly net profit on resurgent sales and forecast a strong 2010 despite concerns of a strengthening won.
Samsung, which had predicted strong quarterly earnings earlier this month, has made a spectacular turnaround this year, riding a sector recovery and wrestling market share from global rivals, sending its stock to a record high last month.
“Samsung has made great progress in strengthening its market leadership throughout 2009, and we believe the outlook is positive for further growth as the global economic recovery continues into 2010,” Robert Yi, Samsung’s head of investor relations, said in a statement.
The statement stood in contrast to the company’s cautious stance so far this year.
Still, Samsung and South Korean peers such as LG Electronics may be hit by a firming won currency and rising competition.
“If the won stays between 1,150 and 1,190 to the dollar, Samsung shouldn’t face big problems. But if it strengthens past 1,150, that would be a serious issue,” said Lee Ka-keun, an analyst at IBK Securities. The won was trading at 1,183 against the dollar on Friday.
“The global economy is another concern. If it faces a double-dip, that will put additional pressure on Samsung,” said Lee.
Samsung itself warned about its fourth-quarter profits.
“We forecast a solid fourth quarter supported by seasonal demand for consumer electronics, though the appreciation of the won and increased marketing expenses may lead to a quarter-on-quarter decline in profit,” Yi said.
By 0246 GMT, Samsung’s shares were up 2.2% in a broader market up 0.7%. Shares in South Korea’s biggest company rose 59% this year through Thursday, beating a 41% gain in the Kospi.
CHIP MARGINS SOAR
Samsung’s semiconductor business posted an operating profit margin of 15% on a consolidated basis, surging from 4% in the second quarter. Several analysts say the unit will post margins above 20% in 2010.
Samsung said it would invest more than 5.5 trillion won ($4.64 billion) in memory chips and around 3 trillion won in the liquid crystal display (LCD) business in 2010, on a consolidated basis, after investing some 7 trillion won company-wide in 2009.
In mobile phones, where Samsung ranks behind only Nokia, profit margin remained flat at 10% despite increased marketing costs and fewer subsidies from mobile operators.
Samsung’s display division reported a profit margin of 15% on a consolidated basis, compared with 3% in the previous quarter. Robust sales of liquid crystal display (LCD) televisions, where Samsung leads rivals Sony Corp and LG Electronics, have helped.
Samsung’s July-September net profit rose to 3.72 trillion won ($3.14 billion) from 1.22 trillion won a year ago, beating an average forecast for 3.34 trillion won from Thomson Reuters, and topping its previous best quarterly net profit of 3.14 trillion won in the first quarter of 2004.