Samsung Posts Record Profits, But TV-Making Arm Slumps

Jonathan Sutton

Samsung Electronics, the largest technology company in the world as far as sales are concerned, reported record-breaking second-quarter profits as a result of strong demand for its memory chips and flat-screen LCDs, though the numbers posted by its TV-manufacturing arm were a letdown.

In the period between April and June this year, operating profit at Samsung jumped 88% from last year’s figure to hit 5.01 trillion Korean won (£2.7 billion), breaking the company’s previous record of 4.41 trillion won (£2.37 billion) posted in the preceding quarter (i.e. the first quarter of 2010). Net profit similarly saw an increase of 83% to 4.28 trillion won (£2.3 billion), beating Bloomberg’s market analysts’ estimates of 4.15 trillion won. These profits were announced against the backdrop of sales revenue rising 17% on a year-on-year basis to 37.89 trillion won (£20.4 billion).

While the LCD display business at Samsung (that supplies LCD panels to other TV manufacturers) chipped in with a trebling of profit to 880 billion won (£474 million), its own digital media division – which is responsible for manufacturing televisions among other devices – suffered a 69% slump in profit to 360 billion won (£194 million).

Despite this, Samsung is maintaining a positive outlook for its flat-panel HDTV business. The company revealed that half a million Samsung 3D-capable HDTVs have been sold since it launched its 3D TV lineup in March this year. The second-quarter alone saw Samsung ship more than 9 million units of flat-screen televisions, spurred by strong demand for its heavily marketed LED TVs, and solid growth in developing markets.

However, the consumer electronics giant warned that the months ahead may become increasingly challenging due to intense competition in the TV-making business, tougher trading conditions, and concerns that demand for HDTVs may hit a snag because consumers have already spent their money on new HDTV sets prior to the World Cup 2010 tournament in South Africa.

Samsung still provided forecasts of 20% year-on-year growth for the third-quarter, and continuing steady demand for its LED TV and 3D TV sets. Drawing on its capital expenditure which this year may surpass earlier projections, Samsung also planned to invest in new business projects such as OLED TVs.