Samsung Electronics reports better than expected Q2 earnings

(ATTN: UPDATES share price in 5th para)
SEOUL, July 24 (Yonhap) -- Samsung Electronics Co., the world's leading computer
memory chipmaker, reported better than expected second-quarter earnings on
Friday, buoyed by brisk sales of mobile handsets and liquid crystal display (LCD)
panels.

The company's net profit reached 2.25 trillion won (US$1.8 billion) in the
April-June period, up 5.2 percent from a profit of 2.14 trillion won a year
earlier, the company said in a regulatory filing.
The second-quarter earnings were higher than the market estimate of around 1.7
trillion won in profit.
Sales increased 15.9 percent to 21.02 trillion won over the cited period, while
operating profit dropped to 1.06 trillion won from 1.89 trillion won, it said.
Shares of Samsung Electronics ended at 683,000 won on the Seoul bourse, up 0.74
percent from Thursday's close.
"The earnings were higher than our estimate, but shares have risen sharply
recently on such expectations," said Roh Keun-chang, an analyst at HMC Investment
& Securities.
He said Samsung's earnings would continue to improve through the rest of the
year, adding that it is well positioned to benefit from a mild recovery in the
global memory chip sector due to its advanced technology.
"Despite a strong won and an increase in marketing costs, we will be able to see
improving earnings in the third quarter and solidify our market dominance,"
Samsung said in a statement.
Samsung said its marketing costs reached 1.35 trillion won during the second
quarter, compared with 668 billion won a quarter ago.
Samsung's key business lines showed better performance during the April-June
period.
Its semiconductor business returned to profit on cost-saving efforts and
increased chip prices. Its chip division posted an operating income of 240
billion won in the second quarter, compared with an operating loss of 670 billion
won in the first quarter.
Industry-wide output cuts have helped drive up prices of dynamic random access
memory (DRAM) chips, while prices of flash memory chips have also risen.
Prices of the benchmark DRAM chips have gained more than 60 percent this year,
and average prices of NAND flash memory chips, which store songs and pictures in
consumer electronics such as MP3 players, have soared around 80 percent so far
this year, according to Dramexchange Technology Inc.
Samsung, also the world's largest maker of liquid-crystal displays and the No. 2
maker of mobile phones, said its LCD division also posted an operating income of
150 billion won during the April-June period, compared with an operating loss of
310 billion won a quarter ago, as demand for TVs and computers increased.
Samsung's information and telecommunication business line logged an operating
income of 1 trillion won, boosted by robust sales of mobile handsets.
The company said it sold a total of 52.3 million handsets in the April-June
period, accounting for roughly 20 percent of the global market.
Last year, its market share in the global handset market reached 16.7 percent. In
2007, its comparable figure was 14.4 percent.
"Despite a global economic slump, demand for handsets such as touch
screen-equipped ones in the North America and European regions remained high,"
Samsung said.
Earlier this week, LG Electronics Co., Samsung's rival in the domestic mobile
handset market, said it sold 29.8 million phones during the second quarter,
grabbing 11.1 percent of the world market share.
"All key businesses outperformed expectations," said Lee Min-hee, an analyst at
Dongbu Securities. "We expect continued surprises in Samsung's earnings down the
road."
Samsung said its consolidated operating profits and sales for the second quarter
reached 2.52 trillion won and 32.51 trillion won, respectively. Its consolidated
pre-tax profit came in at 2.86 trillion won.
Samsung released a better-than-expected report on its consolidated profits
earlier this month, which included earnings from overseas units.
The company forecast a consolidated operating profit for the April-June period of
2.2 trillion-2.6 trillion won, including earnings from overseas units.
It also forecast second-quarter consolidated sales of 31-33 trillion won.
sam@yna.co.kr
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