I wish you a happy and prosperous new year.
In 2012, South Korea's economy stagnated and the economic recovery in China and the U.S. were delayed, while the European financial crisis continued to impact the global economy. Under these circumstances, global businesses continued to face a challenging operating environment stemming from intensifying competition among companies.
Amid the challenging business environment, we delivered another year of strong performance and solidified our leadership in the IT industry by turning risks and challenges into opportunities and continuously enhancing competitiveness and innovation.
I appreciate your ongoing support and interest which helped to make these accomplishments possible. I would like to bring to your attention our performances and the key progresses we made in 2012.
First, we achieved stellar growth in sales and profits driven by strengthening our market leadership in core businesses including smartphones and TVs, and raising the competitiveness of new businesses including System LSI and OLED.
In 2012, we had record sales of KRW 201 trillion, up 22% from the previous year, and doubled operating profit and net profit to KRW 29 trillion and KRW 24 trillion, respectively.
Among our core businesses, Mobile Communication Business improved in both quantitative and qualitative terms and contributed to our company's overall growth. Its smartphones increased in both sales and profitability for the past two consecutive years.
Our TV sets not only continued to hold the top-selling TV brand position for seven consecutive years, but we also maintained the highest profitability in the market.
In our memory business, both DRAM and NAND flash memory products solidified leadership positions and maintained the highest profitability in the industry despite the continued decline in pricing.
As for our growth businesses, the OLED Business achieved significant growth and improved profitability by reinforcing differentiated competitive advantage. The System LSI Business continued its growth momentum and solidified its leadership position in the mobile market, led by application processors (AP), CMOS image sensors (CIS), etc.
Second, we concentrated our competencies on developing key competitive advantages such as technology and brand.
In recent years, new competitors with integrated offering - combining contents, services, and Internet - are changing the global IT industry landscape by breaking the barriers between hardware and software companies.
To prepare for these changes, we continued to secure high-quality talents such as software and R&D experts who are a strong foundation of our long-term success. In addition, we are improving our patent expertise and technical capabilities through partnerships and cooperation with external research institutions.
In 2012, the results of our hard work were materialized in a total of 5,081 patents registered in the U.S. In addition, we received the EISA award - the prestigious European awards in image, sound and mobile - in four categories and 27 of our products received Innovation Awards at CES 2013, the world's largest consumer electronics show.
We continuously strengthened our brand through organized and focused global marketing activities, including the 2012 London Olympics and other global sporting events, resulting in increased market share and profit of flagship products such as smartphone and TV. According to Interbrand, our company's brand value grew 40% to USD 32.9 billion compared to the previous year, and ranked ninth in their Top 100 global brands list.
Third, we continued delivering performance and returning value to our shareholders.
While most companies faced global economic slowdown and slowed growth in the IT industry, we delivered record quarterly earnings and achieved outstanding annual profits. As a result, we witnessed a significant increase in our share price.
The closing price for our common share at the end of 2012 reached KRW 1,522,000, an increase of 44% from that of 2011, yielding elevated interests from global investors as our share price outperformed KOSPI and other IT companies domestically and globally.
In July this year, we declared an interim dividend of KRW 500 per share. We were pleased to announce that we increased the year-end dividend per share by 50% from that of 2011 to KRW 7,500.
In particular, I would like to recognize the hard work and persistent endeavor by our employees to improve business performance that raised corporate values and increased shareholder returns. We promise to continue our utmost efforts in 2013.
In 2013, the global economy will continue to experience challenges arising from Eurozone uncertainties, concerns over delayed economic recovery in the US, and slowing economic growth in China. In addition, global IT companies in the US, China, and Japan are expected to create strategic alliances combining their financial, technological, and manufacturing capabilities.
In this difficult business environment, rather than being complacent about our status quo, we will continue our efforts to better prepare ourselves to take on these challenges proactively and deliver another year of impressive results.
First, we will strive to become a leading enterprise of the global electronics industry.
In our core businesses - mobile handset, memory chips, TV, etc. - we will secure absolute advantage to stay ahead of competitions.
In our growth businesses - home appliances, printer, network equipment, System LSI, etc. - we will bring in the success DNA from our top-performing businesses to become the toptier player in the industries.
In our new businesses such as medical devices, we will create a strong platform to put them on a trajectory of growth at an early stage. In addition, we will strengthen the content and service capabilities which are the key competitive advantages in the mobilebased Internet era. We also plan to achieve growth in B2B business, our future growth engine, as soon as possible.
Second, we will shape our company to swiftly respond to changes and risks.
Increasing uncertainties in today's business environment requires for us to be more flexible, agile, and efficient. To this aim, we will manage investments for facilities, manufacturing, and distribution in a flexible manner. In addition, we will continue to optimize our global supply chain management system and improve our global manufacturing capabilities to meet changes in market demands and volatility in macro-economic conditions.
In regards to the strengthening of business-related regulations around the world, we will make sure that there are no impact in our business operations by fully complying with all applicable laws including competition, privacy, and anti-corruption, etc. In addition, we will continue to improve our risk management system by detecting various market risks early and nurturing a culture of cooperation among business units.
Third, we are committed to becoming a company endeared by our customers and society at large.
We believe gaining respect and trust from our customers, shareholders, and the society is a strategic priority for any great company around the world.
In addition to complying with various legal requirements, we are moving forward to increasing our responsibilities as a good corporate citizen and enhancing our CSR commitments to make contributions to social development.
Furthermore, we will continue to foster a culture of shared and sustainable growth by supporting our domestic and overseas business partners to become globally competitive players in the industry.
Fourth, we are committed to putting our shareholders at the heart of management.
In this period of uncertainties in capital markets and challenging business environment, we recognize achieving sustainable earnings growth is important to improving shareholder value. We will continue to make our utmost efforts to achieve strong earnings results in 2013.
It has been 20 years since we committed ourselves to the company motto "New Management", as we desperately knew then that we needed to change or else forever remain a second-tier company. Today, all employees of Samsung Electronics are determined to renew that commitment, anchored in the spirit of our company's motto.
We recently reorganized our business divisions into three groups to become more adoptive and responsive to the market. In addition to the existing Device Solution (DS) Business group, Consumer Electronics (CE) Business and IT & Mobile Communication (IM) Business groups were newly created. We will prepare each business group with the global competitiveness, thereby making Samsung Electronics the world's leading company of the 21st century and creating a better future.
I once again take this opportunity to express my gratitude and appreciation to our shareholders, and I wish health and happiness to you and your family in 2013.
Vice Chairman & CEO
Samsung Electronics Co., Ltd