Earnings Release

Samsung Electronics Reports Third Quarter 2009 Results

Consolidated Revenues of 35.87 trillion won, Operating Profit of 4.23 trillion won

SEOUL, Korea - October 30, 2009 : Samsung Electronics Co., Ltd. today announced revenues of 35.87 trillion Korean won on a consolidated basis for the third quarter ended September 30, 2009, an 18.5 percent increase year-on-year.

Consolidated operating profit for the quarter was 4.23 trillion won, a 185.8 percent increase year-on-year and up 67.8 percent from the previous quarter. Income before income taxes reached 4.62 trillion won on a consolidated basis. Net income, on a parent company basis, was 3.72 trillion won.

In its earnings guidance disclosed on October 6, Samsung estimated third quarter consolidated revenues would reach 36 trillion won with an operating profit of 4.1 trillion won.

Amid improving global consumer sentiment, Samsung recorded strong results across both major business units - Device Solutions and Digital Media & Communications. For the Device Solutions Business, seasonal demand for key components including memory chips and LCD panels supported a sustained profit recovery, while the Digital Media & Communications Business continued to enhance its market share in mobile phones, flat panel TVs and other premium electronics segments.

"Samsung achieved an outstanding operating profit in the third quarter, with our components and product set businesses performing strongly in tandem," said Robert Yi, Vice President and Head of Samsung Electronics' Investor Relations Team.

"Looking ahead, we forecast a solid fourth quarter supported by seasonal demand for consumer electronics, though the appreciation of the won and increased marketing expenses may lead to a quarter-on-quarter decline in profit. Samsung has made great progress in strengthening its market leadership throughout 2009, and we believe the outlook is positive for further growth as the global economic recovery continues into 2010," he said.

Capital expenditure on a parent company basis for the third quarter was 1.34 trillion won, including 1.08 trillion won for Semiconductor and 180 billion won for LCD facilities. Samsung expects consolidated capital expenditure for the whole year of 2009 to reach 7 trillion won, including 4 trillion for Semiconductor and 2 trillion for LCD, more than initially planned.

Samsung expects to increase capital expenditure further in 2010, with more than 5.5 trillion won planned for its memory business to respond to rising demand and 3 trillion won for LCD.

Additionally, Samsung forecast a weak U.S. dollar will not significantly impact its financial performance as U.S. currency takes only 50 percent of its exchange position. Samsung said its product set business is more influenced by the Euro and Yen. A strong Euro and Yen will enable Samsung to maintain its price competitiveness alongside European and Japanese set manufacturers.

Semiconductor Price Rise Boosts Profit

Samsung's Semiconductor divisions recorded a consolidated basis operating profit of 1.15 trillion won. Revenue reached 7.46 trillion won, a 25.3 percent increase year-on-year.

The significant improvement in operating profit in the third quarter was aided by a rise in market prices for memory chips and increased demand. In DRAM, the average sales price increased 20 percent quarter-on-quarter helped by strong PC sales, while spot prices for 1Gb DDR2 were up 28 percent from the previous quarter. Spot prices for 16Gb MLC NAND flash memory increased 9 percent quarter-on-quarter.

Samsung forecast its Semiconductor divisions will continue to perform strongly moving forward through its technological advantage and cost competitiveness.

LCD Demand Up

The LCD Division recorded an operating profit of 1.01 trillion won as revenue reached 6.73 trillion won, a 20.6 percent increase year-on-year.

Strong seasonal demand for LCD panels from set makers resulted in increased unit sales and higher prices. Samsung shipped 148 million large-sized LCD panels in the third quarter, up 15 percent quarter-on-quarter and 26 percent from the same period last year.

Average sales prices increased across all segments including panels for TVs (up 16 percent), monitors (up 17 percent) and notebook computers (up 22 percent). Samsung's improved operating profit was also supported by increased sales of premium LED and 240Hz TV panels.

Samsung forecast sales to decline in the fourth quarter due to weak seasonality but expected performance to be in line with the previous year. The LCD Division aims enhance its market leadership by expanding its share of the high-end market, including 16:9 aspect ratio panels and eco-friendly products, while expanding partnerships with customers in emerging markets such as China.

Mobile Market Share Expected to Hit 20 Percent

Samsung's Telecommunications divisions registered an operating profit of 1.03 trillion won for the third quarter. Revenue reached 10.71 trillion won, a 20.6 percent increase year-on-year.

Samsung continued its outstanding performance in mobile handsets for 2009, with sales increasing 15 percent quarter-on-quarter to 60.2 million units in the three month period. The company's global market share is estimated to have exceeded 20 percent for the first time, recording a projected 20.8 percent share after reaching 19.2 percent in the second quarter.

While expenses for the quarter increased, Samsung maintained its profit margin through sales of feature-rich touch screen handsets and other premium devices. Across the industry, average sales price declined 3 percent to $120 quarter-on-quarter.

Samsung said it was well on track to beat its full year 2009 target of 200 million in mobile handset unit sales. Projecting a positive outlook for the fourth quarter, Samsung aims to continue to strengthen partnerships with key mobile carriers while further expanding its product lineup. The Telecommunication Systems Division will continue to grow its mobile WiMAX business in Latin and North America, the Middle East and Asia.

Outperforms in Flat Panel TV Market

Samsung's Digital Media divisions registered an operating profit of 940 billion won, a 147 percent increase year-on-year. Revenue reached 12.37 trillion won, an increase of 14.7 percent year-on-year.

In flat panel TVs, Samsung recorded unit sales of 7.73 million, up 22 percent quarter-on-quarter and 24 percent on the same period last year. Samsung's new line of LED TVs continued to sell strongly, with 1.2 million units sold since their debut and a target of 2.5 million units for the year.

Sales for the Digital Appliance Division decline 2 percent quarter-on-quarter, but it said market share for premium products including refrigerators and drum washing machines increased.

Samsung forecast strong sales growth entering the fourth quarter, typically the peak sales season for TVs and other appliances. Sales for LCD TVs were projected to increase 25 percent quarter-on-quarter, while PDP TV sales were expected to rise 26 percent.

Consolidated Basis Revenues and Operating Profit by Business
(in Trillion won)
Business Revenue Operating Profit
'09 3Q '09 2Q '08 3Q '09 3Q '09 2Q '08 3Q
Device Solutions
(Margin)
14.21 11.25 11.55 2.17 (15%) 0.39 (3%) 0.65 (6%)
  Semiconductor
(Margin)
7.46 6.14 5.95 1.15 (15%) 0.24 (4%) 0.19 (3%)
  LCD
(Margin)
6.73 5.10 5.58 1.01 (15%) 0.15 (3%) 0.45 (8%)
Digital Media & Comms
(Margin)
23.25 21.98 19.83 1.98 (9%) 2.07 (9%) 0.80 (4%)
  Telecommunication
(Margin)
10.71 10.04 8.88 1.03 (10%) 1.00 (10%) 0.84 (9%)
  Digital Media
(Margin)
12.37 11.77 10.78 0.94 (8%) 1.06 (9%) -0.05 (-0.5%)
Total
(Margin)
35.87 32.51 30.27 4.23 (12%) 2.52 (8%) 1.48 (5%)
Parent Basis Revenues and Operating Profit by Business
(in Trillion won)
Business Revenue Operating Profit
'09 3Q '09 2Q '08 3Q '09 3Q '09 2Q '08 3Q
Semiconductor 6.11 5.05 4.78 1.08 0.15 0.24
  - Memory 3.80 3.13 3.03
  - Sys.LSI 1.07 0.88 1.02
LCD 6.01 4.56 4.81 0.92 0.19 0.38
Telecommunication 9.08 8.05 6.85 0.70 0.57 0.50
  - Mobile Comms 7.60 6.94 6.09
Digital Media 3.54 3.24 2.67 0.06 0.15 -0.10
  - Digital Appliance 1.63 1.62 1.27
About Samsung Electronics

Samsung Electronics Co., Ltd. is a global leader in semiconductor, telecommunication, digital media and digital convergence technologies with 2010 consolidated sales of US$135.8 billion. Employing approximately 190,500 people in 206 offices across 68 countries, the company operates two separate organizations to coordinate its nine independent business units: Digital Media & Communications, comprising Visual Display, Mobile Communications, Telecommunication Systems, Digital Appliances, IT Solutions, and Digital Imaging; and Device Solutions, consisting of Memory, System LSI and LCD. Recognized for its industry-leading performance across a range of economic, environmental and social criteria, Samsung Electronics was named the world’s most sustainable technology company in the 2011 Dow Jones Sustainability Index. For more information, please visit www.samsung.com.