Samsung Electronics Reports Second Quarter Results

on Jul 16, 2007

Samsung Electronics Reports Operating Profit of KRW 0.91 Trillion

SEOUL, Korea - July 13, 2007: Samsung Electronics Co., Ltd. today announced financial results for the second quarter of 2007 ended June 30, 2007. For the quarter, the company posted a net income of 1.42 trillion won on revenue of 14.63 trillion won. Operating profit for the quarter was 0.91 trillion won on a parent basis or about 1.4 trillion won on a consolidated basis.

Strong performances by the company’s Telecommunication Network and LCD Businesses, and a turnaround by the Digital Appliance Division, highlighted a quarter in which a challenging semiconductor market resulted in a decline in operating profit for the Semiconductor Business.

“During the second quarter, most business divisions of the company performed well,” said Dr. Woosik Chu, executive vice president and head of Samsung Electronics’ investor relations team. “The major exception was semiconductor, which is still well positioned to recover in the second half of this year, and is also pursuing major enhancements in competitiveness that will come to fruition in 2008 and afterwards.”

Operating profit of the Semiconductor Business reached 330 billion won on revenue of 4.26 trillion won in the second quarter. The decline in operating profit was due mainly to a sharp drop in DRAM pricing amid high level of supply.

In the second half of the year, the Semiconductor Business is expected to improve its profit margin further as the high-demand season starts and the company’s cost competitiveness measures continue to take effect.

In the DRAM business, the company is anticipating improvements in its cost competitiveness by transitioning to 80nm to 68nm technology in the second half. Prices of NAND flash chips will also begin to stabilize in the second half of the year following the introduction of new products that require larger memory, such as new mobile handsets and Note PC/UMPC with Solid State Discs.

The Telecommunication Network Business posted an operating profit of 350 billion won on revenue of 4.50 trillion won. On a consolidated basis, operating margins show a steady performance of 500 billion won.

Robust sales of premium handsets, including the “Ultra Edition,” and a solid performance in emerging markets helped boost sales to a record of 37.4 million units for a single quarter. This strong performance led the company to increase its annual sales target to more than 150 million units.

The company is expanding sales and market share in emerging markets and is also focusing on innovations of the handset development processes to eliminate production inefficiency. These activities include re-establishing global supply chain management, outsourcing components at the global manufacturing bases, shortening manufacturing process and introducing new cost-effective platforms. Results of these activities are expected to appear in 2008.

The LCD Business posted revenues of 3.34 trillion won, with operating profit of 290 billion won. Operating profit almost quadrupled from the previous quarter despite traditionally sluggish demand for LCD products in the second quarter. The company demonstrated the value of its increasing market share by breaking the sales mark of 2 million units for 40-inch or larger sized panels in a single quarter.

In the second half of 2007, the LCD Business expects to record double-digit operating income thanks to cost competitiveness and increasing demand for panels, with the eighth-generation line starting operation in the third quarter of the year at the joint venture, S-LCD. Mid to long term, the LCD Business will contribute significant profit improvements as the company’s global market share and innovations in cost efficiency continue to increase competitive value.

The Digital Media Business posted an operating loss of 58.8 billion won on revenue of 1.45 trillion won, on a parent basis. However, on a consolidated basis, its operating profit reached 200 billion won. The sales of “TVs named Bordeaux Plus” reached 750 thousand units and contributed to this favorable result.

The Digital Media Business is maintaining its top position in Flat Panel TV market and continuing to build its brand power globally. In the second half, the Digital Media Business expects its sales and profit margin to improve with its premium LCD TVs.

In the Printer Division under the Digital Media Business, known as an industry with high entry barriers, the company has achieved a successful market position. The company is now focusing on the corporate printer segment to continue to elevate growth and profitability in key markets.

The Digital Appliance Division posted revenue of 950 billion won thanks to strong sales of air conditioners and successful cost reduction efforts. The operating loss of last quarter turned into the black in the second quarter. On a consolidated basis, operating profit reached 100 billion won.

*Samsung Electronics discloses operating profit of certain businesses with a higher portion of global manufacturing (Telecommunication Networks, Digital Media and Digital Appliance) on a consolidated basis to provide a clearer understanding of the business.


About Samsung Electronics

Samsung Electronics Co., Ltd. is a global leader in semiconductor, telecommunication, digital media and digital convergence technologies with 2006 parent company sales of US$63.4 billion and net income of US$8.5 billion. Employing approximately 138,000 people in 124 offices in 56 countries, the company consists of five main business units: Digital Media Business, LCD Business, Semiconductor Business, Telecommunication Network Business and Digital Appliance Business. Recognized as one of the fastest growing global brands, Samsung Electronics is a leading producer of digital TVs, memory chips, mobile phones and TFT-LCDs. For more information, please visit www.samsung.com.