January 26, 2001 in Social Responsibility News

SAMSUNG Achieves Operating Profit Margin of 22%

SEOUL, Korea - January 19, 2001 - Samsung Electronics Co., Ltd. today announced its financial results for the year 2000 and its 2001 business plans at a corporate presentation for investors. At the presentation, Samsung Electronics announced that it had achieved consolidated total sales of KRW42 trillion and that the parent company had recorded sales of KRW34.3 trillion, pretax profit of KRW8.1 trillion and net income of KRW6.0 trillion.
By business, the Semiconductor Business recorded sales of KRW13 trillion, where the memory division, TFT-LCD division and System LSI division recorded sales of KRW8.5 trillion, KRW2.8 trillion and KRW1.7 trillion, respectively. As a result, the Semiconductor Business contributed 38% to total sales. In other areas, the Information and Communications business contributed 22% to sales with total sales of KRW7.6 trillion, sales of the Digital Media System business reached W9.4 trillion to make up 27% of total sales and the Home Appliances business recorded sales of W2.7 trillion, contributing 8% to total sales.
Annual growth of each business is as follows: Semiconductor Business sales increased by 40% (KRW9.3 trillion in 1999), Information & Communications Business sales increased by 15% (KRW6.6 trillion in 1999), Digital Media System Business sales increased by 48% (KRW6.3 trillion in 1999) and Home Appliances Business sales increased by 25% (KRW2.2 trillion in 1999).

In addition, Samsung Electronics announced operating income figures for each business for the first time in its history. The Semiconductor Business recorded an operating income of KRW6.1 trillion for a profit margin of 47%. Compared to last year's KRW3.1 trillion, operating income for the semiconductor business increased by KRW3 trillion.
In 2000, there were many conditions in the telecommunications industry to deter an increase in sales, such as the elimination of mobile phone subsidies in Korea, SK Telecom's efforts to reduce its market share after gaining management control of Shinsegi Telecomm and the ban of mobile phone imports from Korea to China after a garlic trade dispute between the Korean and Chinese governments. Despite these difficulties, Samsung Electronics' Information & Communications Business was able to record operating profits of KRW900 billion. The figure is similar to the KRW1 trillion recorded in 1999.

The Digital Media System Business recorded operating profits of KRW500 billion and the Home Appliances Business increased operating profits to KRW200 billion.
Most important, Samsung was able to achieve an operating profit margin of 22% with sales of KRW34.3 trillion and operating profits of KRW7.4 trillion. The company now believes that it has achieved the superior, value-added business structure it has tried to form during its restructuring period.
In addition, the company made improvements to its financial structure, increasing its equity-to-asset levels from 54% in 1999 to 59% in 2000. It also decreased its liability-to-equity ratio from 85% in 1999 to 66% in 2000 with shareholders' equity of KRW16.2 trillion and liability of KRW10.6 trillion.
In 2001, Samsung's vision is to become a "Digital-E Company". In order to accomplish this, the company will continue to extend its leadership in its number 1 businesses (DRAMs, SRAMs, Rambusa DRAM, color monitors, TFT-LCDs, microwave ovens and digital TVs). It will implement E-management processes, maximize long-term profits and work to improve shareholder and customer value.

Samsung expects to record sales of KRW37.1 trillion in 2001, an increase of 8% in sales from 2000. Although the company has plans to allot KRW7.3 trillion (semiconductor: KRW6.6 trillion) in capital expenditure, Samsung may alter this figure after periodical examinations of semiconductor market conditions.
After its restructuring program which consisted of focusing on future value-adding businesses through a management policy of "Select and Focus", and diversifying its strength in DRAMs (dynamic random access memory) to TFT-LCDs (thin film transistor-liquid crystal display) and System LSI (large-scale integration) products, Samsung Electronics is no longer deeply effected by the volatility of one market.
In particular, Samsung Electronics has improved its business in many product areas within its memory division, such as synchronous DRAM, Rambusa DRAM, flash memory and EDO DRAM chips. The company also ranks as the fifth largest producer of LDIs (LCD driver IC) and it is improving its competitiveness in 8 product areas in its System LSI business, including RF (radio frequency) and MCU (microcontroller unit) chips. In the TFT-LCD business, the company expanded the gap in market share between it and the second largest manufacturer to 5%.

The company expects growth to continue in 2001 should there be no wide-spreading negative forces in the economic environment.
In 2000, Samsung Electronics employed 40,000 people in Korea and it recorded sales of KRW805 million per employee. In its 15,000-some strong Semiconductor Business, the operating profit per employee figure was at KRW400 million, a new record among Korean companies.

About Samsung Electronics
Samsung Electronics Co., Ltd., with 2000 sales revenue of KRW34.3 trillion (US$28 billion) is a world leader in the electronics industry. The Korea-based concern has operations in about 50 countries with 54,000 employees worldwide. The company consists of three main business units: Digital Media, Semiconductors and Information & Communications Businesses. For more information, please visit our website, http://samsungelectronics.com
The figures announced in this release are based on unaudited financial figures for the year 2000. Slight changes of these figures can be made at the conclusion of the auditing process.

Rambus, RDRAM and the Rambus logo are registered trademarks of Rambus Inc. Direct Rambus, Direct RDRAM, RIMM and SO-RIMM are trademarks of Rambus Inc.

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