Samsung Electronics announces first quarter 2011 results

Samsung Electronics today announced revenues of $206.2 million on a consolidated basis for the first quarter ended March 31, 2011, a 7-percent increase year-on-year. For the quarter, the company posted consolidated net income of $194.3 million, representing a 30-percent decrease year-on-year. Consolidated operating profit for the quarter was $206.2 million.

In its earnings guidance disclosed on April 7, Samsung estimated first-quarter consolidated revenues would reach approximately $258.6 billion with an operating profit of $20.3 billion.

By business, Telecom, Semiconductor and Digital Media & Appliances drove revenue growth in the quarter. The Semiconductor Business saw sales jump 12-percent year-on-year thanks to stronger demand for NAND products used in smartphones and tablet PCs, while the Telecom segment continued to perform strongly with sales reaching $74.36 billion.

“A difficult business environment remained in the first quarter, due to rising costs of raw materials, uncertainties in the financial market in Europe, and the devastating earthquake in Japan,” said Sangsuk Roh, President of Samsung Electronics Levant. “But we will actively respond to such challenges by enhancing cost competitiveness in memory products through geometry migration, launching new smartphones and tablet PCs, as well as increasing the sales focus on premium LCD panels and TVs.”

Samsung forecasts that the challenging business conditions will persist in the second quarter, effected by lingering worries over the global economy and tight competition in consumer electronics and mobile businesses.

The impact on earnings from volatility in foreign exchange was minimal, as the fluctuation of the Korean won against the US dollar and the euro was less than 1 percent. With regards to concerns over disruptions to the supply chain after the March 11 earthquake in Japan, Samsung expects the impact on its businesses to be relatively limited.

Samsung’s previously announced capital expenditure for 2011 of $160.75 billion is being executed as planned. During the first quarter, capex was $38.4 billion or 24 percent of the annual plan, which could be increased depending on market conditions.

Beginning this quarter, Samsung has renamed the LCD and Digital Media segments in the earnings release as Display Panel (DP) and Digital Media & Appliances (DM&A), respectively. The set-top box product line, which previously was under Telecom, is now part of DM&A, and 2010 earnings have been re-stated for comparison.

Samsung’s Semiconductor Business recorded a consolidated operating profit of $11.46 billion in the first quarter, down from the $13.7 billion registered a year ago. Revenue reached $64.16 billion, a 12-percent increase year-on-year.

The Telecommunications businesses – including mobile communications and telecommunication networks – posted an operating profit of $9.99 billion on revenue of $74.36 billion. The businesses maintained an operating profit margin of 13.5 percent for the quarter.Operating profit for Digital Media & Appliances Business turned around from the previous quarter to register $698,913 on revenue of $94.49 billion in the first quarter.