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Samsung 4Q profits top forecasts on Galaxy sales
But the company said Friday it expects earnings to decline during the current quarter because of seasonally low demand for consumer electronics. It is also leaving its 2013 capital expenditure at the same level as last year at 23 trillion won ($21.5 billion), underlining uncertainty about the global economy and declining demand for personal computers.
The strong South Korean won is also becoming a negative for Samsung. It expects more than 3 trillion won will be shaved from its 2013 operating profit due to the stronger local currency. Samsung’s shares fell as much as 3 percent after earnings release.
Net profit for the final quarter of 2012 totaled 7.04 trillion won ($6.6 billion), a 76 percent surge from 4.01 trillion won a year earlier. Analysts had expected 6.95 trillion won in net profit, according to financial information provider FactSet. Sales rose 19 percent over a year earlier to 56.06 trillion won and operating income jumped 89 percent to 8.84 trillion won.
Increased sales of smartphones were the key source of its profit growth. Samsung, which overtook Apple Inc. as the top smartphone maker last year, said its operating profit from the division that makes and sells smartphones and tablets more than doubled to 5.44 trillion won in the fourth quarter, from 2.56 trillion won a year earlier.
Most analysts believe the Suwon, South Korea-based Samsung shipped more than 60 million smartphones, including the Galaxy S III and Galaxy Note II, during the three months ending in December, which would put the year’s smartphone sales at more than 200 million. Apple said it sold 47.8 million iPhones in the quarter.
Hong Kong-based research firm Counterpoint Research said Samsung took 33 percent market share in the fourth quarter, compared with Apple’s 21 percent. Another market researcher IDC put Samsung’s share at 29 percent versus Apple’s 22 percent.
The company’s component divisions that make semiconductor products and display panels also benefited from a rise in demand for smartphones. Sales of mobile processors that power popular devices such as Apple’s iPhones and Samsung’s own Galaxy smartphones boosted the bottom line.
The recovery in the display panel division was also led by strong sales of advanced mobile-phone screens called OLED, which are mostly found in high-end Samsung smartphones. The display division posted 1.11 trillion won in profit compared with a small loss a year earlier.
Analysts said Samsung will likely see a continued rise in smartphone sales this year, especially in low- and mid-priced models where it doesn’t face competition from Apple. Some analysts, including Young Park at Woori Securities, forecast Samsung smartphone shipments to rise as much as 50 percent this year from 2012 to over 300 million units.
Samsung executives said during the conference call with investors that smartphone demand will ease in the current quarter without giving guidance for the company’s performance. But analysts said that Samsung could be little affected by market demand thanks to its variety of products that range from affordable to expensive devices.
“Even though they said demand for smartphone will slow down in the first quarter, Samsung will likely buck the industry trend and its own smartphone sales will go up,” said Byun Han-joon, an analyst at KB Investment & Securities.
Apple, which keeps its iPhone price high, might see iPhone sales plateau in coming years as more consumers snap up cheaper Android phones.
Still, Apple’s business has been more profitable because of the high price of the iPhone, which generates a larger profit per sales. Samsung, which makes dozens of handset models a year and customizes them for mobile operators, also sells cheaper smartphones and spends about three times more on expenses such as marketing and advertising costs to promote its Galaxy brand phones and televisions.
Counterpoint Research estimates Apple, though it sold fewer handsets than Samsung, took 70 percent of profit in the handset market during the fourth quarter, while the South Korean rival claimed 25 percent.
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