Samsung profit jump below forecast
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A model shows off Samsung's largest flat panel screen.
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SEOUL, South Korea (Reuters) -- Samsung Electronics Co Ltd, Asia's most valuable electronics company, reported a quarterly profit rise of 24 percent on explosive demand for flat screens and chips for digital cameras.
But net profits at the world's biggest memory chip maker and third-largest mobile phone producer fell short of forecasts, mainly because of losses at its credit card affiliate, Samsung Card.
Sales of flash memory chips, used in digital cameras and tiny music players, are growing at a breakneck pace, while people are increasingly moving to flat screen computer monitors and televisions from traditional cathode-ray units.
"The quarterly net profit is disappointing but we are treating card-related losses as a one-off item," said Chung Doo-sun, a fund manager at CJ Investment Trust Management. "We are bullish on Samsung and expect profits to rise 30 percent this year with flash and LCD being the company cash cow."
Shares in Samsung, which has a market value of about $70 billion, were up 0.4 percent at 496,500 won in late trading. The stock has risen 21 percent in the last six months, beating an 18 percent gain in the broader market and hitting a record high of 512,000 won last Friday.
Samsung earned 1.86 trillion won ($1.57 billion) in net profit for the three months ended December 31, short of analysts' forecasts of 2.01 trillion won. This compared with a profit of 1.50 trillion a year earlier. Turnover was 12.89 trillion won, versus revised 2002 sales for the quarter of 10.59 trillion.
Record operating profits
On the operating level, Samsung posted a record quarterly profit of 2.63 trillion won against a revised 1.61 trillion a year ago. It did not immediately quantify losses from its 56 percent ownership of Samsung Card, which like its peers has been hit by a surge in unpaid credit card bills.
Rival Intel Corp, the world's largest producer of microchips, on Wednesday reported a doubling of quarterly profit and its highest-ever quarterly revenue, as technology spending in North America and Europe showed signs of a revival.
Samsung said earnings from memory chips grew, with sales of flash chips rocketing.
Samsung and Japan's Toshiba Corp hold 95 percent of the $4.7 billion market for NAND-type flash chips, which are used in memory cards for digital cameras and other products because they can write and erase data quickly and retain their contents without power.
Samsung said it expects sales to rise to an all-time high of 46.34 trillion won in 2004, versus 43.58 trillion won last year. It plans a record 7.92 trillion won in capital spending this year, against 6.74 trillion won last year.
The company is expected to ring up 7.62 trillion won in net profit in 2004, up 28 percent from 5.96 trillion in 2003, according to Reuters Research.
LCD prices rise
Another bright spot in the fourth quarter was flat screens, with LCD prices rising on increased demand and shortages in key components.
Operating profits at Samsung's semiconductor division, which includes memory chips and flat screens, more than doubled to 2.02 trillion won in the fourth quarter from 875 billion won a year earlier.
As for mobile phones, Samsung sold 15.5 million handsets in the quarter, edging past its earlier forecast of about 15 million, on an aggressive drive into the U.S. and European markets. It sold 55.6 million phones in 2003.
Samsung aims to sell 75 million cell phones this year, grabbing some 13 percent of the global mobile phone market, Choi Chang-soo, vice president of Samsung's telecommunications division, told analysts.
It has more than doubled its global handset share to 12 percent in three years, overtaking Siemens AG and Sony Ericsson, and is challenging Motorola Inc and Nokia.
Copyright 2004
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
