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Samsung Posts Record Profit

Jan. 25, 2013
Samsung cautioned that the "furious growth spurt" in the global smartphone market in 2012 would be "pacified" this year by intensifying price competition compounded by a slew of new products.

SEOUL -- Samsung Electronics (IW 1000/25) said Friday net profit soared 75.6% to a record 7.04 trillion won ($6.6 billion) in the fourth quarter of 2012, driven by strong smartphone and memory chip sales.

The world's largest technology firm by revenue and top smartphone maker also saw a record operating profit in October-December of 8.84 trillion won, up 89.7% from a year earlier.

The figures were largely in line with Samsung's guidance released earlier this month.

For all of 2012, Samsung logged a net profit of 23.8 trillion won, with revenue and operating income reaching 201.1 trillion won and 29.05 trillion won respectively.

The company said growth in the fourth quarter was mainly driven by "solid sales" of its flagship Galaxy S3 and Galaxy Note 2 smartphones.

IT and Mobile Communications accounted for the lion's share of operating profit in the fourth quarter, racking up 5.44 trillion won on revenue of 31.32 trillion won.

However, Samsung cautioned that the "furious growth spurt" in the global smartphone market in 2012 would be "pacified" this year by intensifying price competition compounded by a slew of new products.

"In the first quarter, demand for smartphones in developed countries is expected to decelerate," the company said.

Samsung's growth momentum still remains faster than smartphone rival Apple's, and analysts expect it to stay that way for much of the year due to a larger mix of products.

While shares in Samsung have climbed 12% over the past three months, Apple has slumped 20%. The California-based company announced record quarterly profits on Wednesday, but investors soured on forecasts of leveling growth and reduced profit margins.

While Samsung does not provide figures for quarterly smartphone shipments, analysts estimate the company sold 63 million smartphones on total handset sales of 110.5 million units.

Other Products Showing Strong Growth

The company's chip, display panel and consumer electronics divisions also saw an improvement in their quarterly results.

Memory chip business contributed $1.3 billion in operating profits, a 39% quarterly increase. However, Samsung warned demand in the first quarter of 2013 would be tempered by a seasonal drop in PC and mobile device sales.

Although demand was weak for PC DRAM during the fourth quarter, the semiconductor unit posted $8.97 billion in sales, a 10% increase quarter over quarter.

October-December saw strong sales of LED TVs, but the global downturn resulted in slipping demand for home appliances in general, despite a rise in sales of high-end refrigerators and washers in the United States and Europe.

"Despite uncertainties in Europe and concerns over the US fiscal cliff... we did our best this quarter to achieve strong earnings based on... high value-added products as well as our technological competitiveness," Investor Relations chief Robert Yi said in a statement.

"Heading into this year, we are expecting a slow recovery in the component business due to reduced capital expenditures, while competition in the set business will intensify further as demand slows," Yi said.

Copyright Agence France-Presse, 2013

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