Samsung reports good Q3, bright outlook for 2010

Samsung Electronics achieved healthy increases in sales and profits during the third quarter of the financial year thanks to higher demand for its components and finished products, it said Friday. The company also said it expects global demand for its products to improve next year and brought forward some investment originally planned for next year.

Sales in the July to September period were 35.9 trillion won (US$30 billion), up 18 percent on the same period last year, while consolidated operating profit almost tripled to 4.2 trillion won. Samsung didn't announce company-wide net profit figures.

Sales and profitability rose across the board in all of Samsung's four main business sectors.

In the semiconductor division prices for DRAM chips, which are used as main memory in PCs, increased during the quarter on the back of seasonal demand and NAND flash memory prices also increased.

Samsung shipped 26 percent more LCD panels in the quarter than the same period last year. Demand was strong from laptop and monitor makers and Samsung saw strong demand for TV panels thanks to companies gearing up for year-end sales and higher sales in China.

In the telecom Samsung shipped 60.2 million cell phone handsets during the quarter however the average selling price of each handset dropped 3 percent to US$120. The company blamed this drop on lower shipments in South Korea, where the selling price is generally higher than other markets.

It's digital media division, which includes PCs, televisions and other consumer electronics, returned to operating profitability from a loss in the third quarter of last year. Flat-panel TV shipments jumped 24 percent year-on-year

Samsung said it would push forward with plans to build more advanced semiconductor production lines and will bring forward some spending planned for next year to this year. Total capital expenditure this year will be around 7 trillion won of which 4 trillion won will be on semiconductors and 2 trillion won on LCDs.

Next year it plans to invest even more. While noting capital expenditure plans to 2010 have not been fixed Samsung said it will spend around 5.5 trillion on semiconductors and 3 trillion won on LCD.

Looking ahead, the company expects a good 2010.

"We expect the global economy recovery to drive growth for most products," said Robert Yi, vice president of Samsung's investor relations department. PC demand is expected to see close to double-digit growth, LCD close to 20 percent growth and cell phone handset growth in double digits.

The IDG News Service is a Network World affiliate.