Samsung Electronics Co., Ltd. on Friday reported revenues of 47.3 trillion Korean won on a consolidated basis for the fourth quarter ended December 31, 2011, a 13-percent increase year-on-year. For the quarter, the company posted consolidated operating profit of 5.3 trillion won, representing a 79-percent increase year-on-year. Consolidated net profit for the quarter was 4 trillion won. 

In its earnings guidance disclosed on January 6, Samsung estimated fourth-quarter consolidated revenues would reach approximately 47 trillion won with consolidated operating profit of approximately 5.2 trillion won. 

The fourth quarter results brought Samsung’s full year 2011 revenue to an all-time high of 165 trillion won, up 7 percent from the previous year. Net income registered 13.73 trillion won, down 15 percent compared with 2010, while operating profit was 16.25 trillion won, a 6-percent on-year decline. 

Highlighting the quarterly performance, the Telecommunications businesses reached record quarterly earnings of 17.82 trillion won, up 52 percent from the previous year, with growth mainly driven by strong sales of Samsung’s GALAXY S II and GALAXY Note. Operating profit for the businesses also hit a record 2.64 trillion won on-quarter. 

“Despite intensified competition amid the global economic slowdown, our Telecommunications businesses continued to post solid earnings with an enhanced line-up of high-end smartphones, resulting in higher average selling price (ASP). Moreover, improved profitability and earnings growth of our Set businesses, including smartphones and flat panel TVs led to our company’s strong earnings,” said Robert Yi, Senior Vice President and Head of Investor Relations. 

Yi also attributed the solid performance to Samsung’s differentiated technology, cost competitiveness, targeted marketing activities and supply chain management (SCM) capabilities throughout all business units. 

Samsung’s reinforced lineup of LED TVs, including premium models for advanced markets and region-specific models for emerging markets, has also improved quarter-on-quarter sales. 

On the components business side, the Semiconductor Business saw demand for PC DRAM remain weak but growth of specialty products such as server and mobile DRAM was constant due to the rising demand for smartphones and tablet PCs. Although profitability for memory chips and LCD declined, rapid growth in system LSI and OLED panels was a promising signal for future growth. 

Capex to Reach 25 Trillion Won in 2012 

In 2012, capital expenditure is forecast to amount to 25 trillion won, in which 15 trillion won will be invested in the Semiconductor Business that consists of memory and system LSI. Of the total Capex planned for this year, 6.6 trillion won will be allocated for investment in the Display Panel (DP) segment, which encompasses LCD Business and subsidiary Samsung Mobile Display. 

Last year, Samsung executed a total of 23 trillion won in investments, including 13 trillion won for Semiconductor Business and 6.4 trillion won for the DP segment. Capex for the fourth quarter was around 5.9 trillion won. 

NAND Demand Strong Amid Mobile Market Growth 

Samsung’s Semiconductor Business – including Memory and System LSI – posted consolidated operating profits of 2.31 trillion won in the fourth quarter. Revenue reached 9.17 trillion won, a 1-percent decrease year-on-year. For the full year 2011, the chip unit registered 7.34 trillion won in operating profits on revenue of 36.99 trillion won. 

The Semiconductor Business sustained profitability in the quarter, amid weak market demand, thanks to a mix of high-margin products such as servers and Solid State Drives (SSDs) and robust demand for NAND chips used in mobile devices such smartphones and tablet PCs. 

Looking ahead, demand for PC DRAM is expected to remain sluggish in the first quarter due to static global market trends compounded by a recent disruption in the supply of hard disk drives. Demand for NAND flash chips is expected to remain solid with the release of new mobile devices to market, while system LSI will see profits slip in the first quarter, due to off-season market conditions. 

For the year, Samsung plans to secure price competitiveness in the market through differentiated mobile and server DRAM products by expanding 30nm-class and below processes. In the case of NAND, the company will focus on securing profitability by consistently expanding 20nm-class processes. Investment in system LSI will be expanded to proactively respond to the rising demand for application processors and image sensors.