Samsung Q4 net profit hits record $6.6B

The South Korean electronics giant booked a 76 percent jump in its fourth quarter net profit, thanks to strong sales of its mobile devices, but warned of headwinds this year.
Written by Jamie Yap, Contributor

South Korea's Samsung Electronics has posted a record net profit for the fourth quarter at 7.04 trillion won (US$6.6 billion). This was attributed to strong sales of devices such as its Galaxy S3 and Note 2, but the firm warned of headwinds in 2013, such as higher costs and a stronger won.

Net profit jumped by 76 percent from the previous year. This was on the back of 56.06 trillion won (US$52.4 billion) revenue for the quarter ended December 31, 2012--an increase of 18.5 percent.

Consolidated operating profit increased 10 percent from the previous quarter to hit 8.84 trillion won (US$8.3 billion), also a record high according to a Reuters report.

The latest financial results were in line with Samsung's earnings guidance disclosed earlier on January 8, which estimated fourth quarter consolidated revenues of approximately 56 trillion won (US$52.3 billion) and consolidated operating profit of approximately 8.8 trillion won (US$8.2 billion).

Full-year 2012 operating profit was 29.05 trillion won (US$27.2 billion) on revenue of 201.10 trillion won (US$188.1 billion), according to Samsung in the statement.

For its strong performance, Samsung highlighted its mobile communications business, which generated a quarterly revenue of 27.23 trillion won (US$25.4 billion), an increase of 4 percent compared with the previous quarter. This growth was driven mainly by the strong sales of the Galaxy S3 and Galaxy Note 2 devices, which "beat the popularity of their predecessors with record sales in record time."

"Despite uncertainties in Europe and concerns over the US fiscal cliff creating a difficult business environment, we did our best this quarter to achieve strong earnings based on a strategic focus on differentiated and high value-added products, as well as our technological competitiveness," said Robert Yi, senior vice president and head of investor relations at Samsung.

"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 and the mid- to low-end market expands," he said, also noting the growing strength of the Korean won.

Samsung also said that the growth spurt in the worldwide smartphone market in 2012 is expected to be tempered by intensifying price competition from the entry of new products.

In the statement today, it predicted that in this year's first quarter, smartphone demand in developed countries would slow down. However, the year would see demand go up in emerging markets--described as a "silver lining"--with the introduction of affordable smartphones and a growing appetite for tablets.

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