Earnings Release

Earnings Release Q1 2011
S
Samsung
Electronics
El t i
April 2011
Disclaimer
The financial information in this document are consolidated earnings results based on K-IFRS.
This document is provided for the convenience of investors only,
only before our external audit on Q1 2011 financial
results of our headquarters is completed. The audit outcomes may cause some parts of this document to change.
This document contains "forward-looking statements" - that is, statements related to future, not past, events.
In this context, "forward-looking statements" often address our expected future business and financial performance,
and
a
do
often
te co
contain
ta words
o ds suc
such as "expects”,
e pects , "anticipates”,
a t c pates , "intends”,
te ds , "plans”,
p a s , "believes”,
be e es , "seeks”
see s o
or "will ".
“Forward-looking statements" by their nature address matters that are, to different degrees, uncertain.
For us, particular uncertainties which could adversely or positively affect our future results include:
· The behavior of financial markets including
g fluctuations in exchange
g rates,, interest rates and commodity
yp
prices
· Strategic actions including dispositions and acquisitions
· Unanticipated dramatic developments in our major businesses including Semiconductor, DP (Display Panel),
Telecommunication, DM & A (Digital Media & Appliances)
· Numerous other matters at the national and international levels which could affect our future results
These uncertainties may cause our actual results to be materially different from those expressed in this document.
Income Statement
(Unit: Trillion Won)
Sales
4T#’44
+(#ri#vdohv,
36.99
100%
4T#’43
+(#ri#vdohv,
7T#’43
7%↑
34.64
100%
41.87
\0rq0\
+(#ri#vdohv,
100%
Cost of Sales
26.05
70.4%
13%↑
23.01
66.4%
29.12
69.5%
Gross Profit
10.93
29.6%
6%↓
11.63
33.6%
12.76
30.5%
R&D expenses
2 34
2.34
6 3%
6.3%
14%↑
2 05
2.05
5 9%
5.9%
2 43
2.43
5 8%
5.8%
SG&A expenses
5.79
15.7%
5%↑
5.54
16.0%
7.20
17.2%
Other operating profits / losses
0.15
0.4%
59%↓
0.37
1.1%
△0.12
△0.3%
2.95
8.0%
33%↓
4.41
12.7%
3.01
7.2%
Equity method gains / losses
0.38
1.0%
19%↓
0.46
1.3%
0.69
1.7%
Finance incomes / expenses
0.06
0.2%
40%↓
0.11
0.3%
△0.09
△0.2%
Profit Before Income Tax
3.39
9.2%
32%↓
4.97
14.4%
3.62
8.6%
Income tax
0.60
1.6%
38%↓
0.98
2.8%
0.20
0.5%
Net profit
2.78
7.5%
30%↓
3.99
11.5%
3.42
8.2%
Operating Profit
Key Profitability Indicators
22%
4T ’44
4T#
44
4T ’43
4T#
43
7T ’43
7T#
43
12%
22%
17%
Profitability (Net income/Sales)
0.08
0.12
0.08
Asset turnover (Sales/Asset)
1 09
1.09
1 22
1.22
1 36
1.36
Leverage (Asset/Equity)
1.50
1.53
1.52
16%
21%
14%
ROE
EBITDA Margin
ROE
EBITDA Margin
21%
17%
14%
1Q ’10
4Q ’10
16%
12%
1Q ’11
1
Segment Information
Sales by Segment
(Unit: Trillion Won)
4T#’44
\0rq0\
4T#’43
7T#’43
Semiconductor
9.18
12%↑
8.20
9.25
- Memory
- S.LSI
5.87
2.32
5%↑
100%↑
5.59
1.16
6.04
2.16
6 51
6.51
5%↓
6 85
6.85
7 20
7.20
5.27
12%↓
5.98
5.81
10.64
19%↑
8.96
11.75
10.14
18%↑
8.57
11.15
DM & A
13.52
13.5
5%↑
12.83
16.33
- VD
7.68
1%↑
7.61
10.28
- Appliances
2.79
13%↑
2.47
2.97
△2.21
△2.67
34.64
41.87
DP
- LCD
Telecom
- Mobile
Others
△2.87
Total
36.99
7%↑
※ Sales of each segment include intersegment sales
Operating Profit by Segment
4T#’44
+Pdujlq,
1.64
17.9%
5.9%p↓
p↓
1.96
23.8%
1.80
△0.23
△3.5%
10.7%p↓
0.49
7.2%
0.10
Telecom
1.43
13.5%
1.2%p↑
1.10
12.2%
1.48
DM & A
0.10
0.8%
3.3%p↓
0.53
4.1%
△0.20
(Unit: Trillion Won)
Semiconductor
DP
Others*
Total
\0rq0\
△0.004
2.95
※ Other businesses & Other operating profits/losses
4T#’43
+Pdujlq,
0.34
8.0%
4.7%p↓
4.41
7T#’43
△0.16
12.7%
3.01
※ Since SetTop Box business belonging has been changed (from Telecom to
DM & A), related 2010 earnings have been re-stated
2
Cash Flow Statement
4T ’44
4T#
44
7T ’43
7T#
43
22.48
21.79
4.34
8.02
Net profit
2.78
3.42
Depreciation
2.98
2.87
△1.42
1.73
△5.95
△7.33
△5 53
△5.53
△6 64
△6.64
Cash flow from Finance
1.43
△0.27
Increase in Debts
1.04
△0.18
(Unit: Trillion Won)
Cash (Beginning of period)*
Cash flow from Operation
Others
Cash flow from Investment
Increase in tangible assets
Net increase in cash
△0.14
Cash (End of period)*
0.69
22.34
22.48
* Cash = Cash + Cash equivalents + Short-term financial instruments + Short-term available-for-sale securities
Cash & Net Cash Position
22.48
22.34
11.70
10.79
21.79
20.64
12.39
20 43
20.43
10.06
10.78
Cash
Net Cash
’10 1Q
’10 2Q
’10 3Q
’10 4Q
’11 1Q
3
Statement of Financial Position
4T ’44
4T#’44
7T ’43
7T#’43
4T ’43
4T#’43
Current assets
60.96
61.40
55.30
Cash*
22.34
22.48
20.64
Trade accounts & notes receivable
17.74
19.15
17.02
Inventories
14.18
13.36
11.72
Non-current assets
75.58
72.89
59.80
Investments
12.18
11.80
9.59
PP&E
55 18
55.18
52 96
52.96
44 03
44.03
136.53
134.29
115.10
11.55
10.78
8.25
Total liabilities
45.03
44.94
39.86
Total shareholders’ equity
91.50
89.35
75.24
(U it Trillion
(Unit:
T illi
W
Won))
Total assets
Debts
* Cash = Cash + Cash equivalents + Short-term financial instruments + Short-term available-for-sale securities
Key Financial Indicators
4T#’44
7T#’43
4T#’43
160%
154%
157%
Liability/Equity
49%
50%
53%
D bt/E it
Debt/Equity
13%
12%
11%
△12%
△13%
△16%
(Unit : %)
Current ratio*
Net debt/Equity
* Current ratio= Current Assets / Current Liabilities
4
Semiconductor
Memory
PC shipment
(Million units)
120
(GB/Sys)
Desktop PC
Netbook
Q1 results
Note PC
GB/Sys
6.0
• DRAM : Weak PC demand due to seasonality,
but solid demand continued for mobile/server applications
- PC shipment
hi
t : high-single
hi h i l digit↓(QoQ),
di it↓(Q Q) flat
fl t (Y
(YoY)
Y)
ㆍ GB/Sys : Approximately 10%↑(QoQ) , mid-20%↑(YoY)
60
3.0
0
’10.Q1
’10.Q4
0.0
’11.Q1
(Source : SEC)
1Gb DDR3 DRAM (Left)
• NAND : Strong set/embedded demand amid weak channel demand
- Solid demand for mobile applications (smartphones and tablets)
- Weak demand in channel such as memory card due to seasonality
Memory spot price trends
$4.00
☞ Samsung : Achieved solid performance through strengthening cost
competitiveness via 3Xnm migration and reinforcing
high value-added product lineup (e.g. mobile/server DRAM)
$8.00
32Gb MLC NAND(Right)
$3.00
☞ Samsung : Improved business performance by strengthening cost
competitiveness via 2Xnm migration and expanding
set/embedded market sales
$6 00
$6.00
System LSI
$2.00
$4.00
$1.00
led to increased demand for major products
(i.e. AP, high-pixel image sensors)
※ 1Gb DDR3 1.3Ghz
1 3Gh (Q1) : 27%QoQ↓
27%Q Q↓
32Gb MLC (Q1) : 5%QoQ↑
$0.00
$2.00
'10.Q2
'Q3
Q4
• Strong demand for high-performance mobile devices (e.g. smartphones)
'11.Q1
(Source : DRAM Exchange, SEC)
☞ Samsung : Achieved sales growth via mass production of dual core AP
and increased shipment of high-pixel image sensor, etc.
5
Semiconductor
Market
Memory in smartphone
(MB/Sys)
(GB/Sys)
800
NAND (Right)
8.0
6.0
400
4.0
200
2.0
0
0.0
2008
• DRAM : Expect inventory buildup demand ahead of peak seasons
despite weak seasonality
10.0
DRAM (Left)
600
Business outlook
2009
2010
2011
- Low BOM cost of DRAM and resolution of Intel chipset issue to help demand
- Solid demand for Mobile DRAM to continue with pull-in demand for smartphones/
tablets
• NAND : Market tightness to continue with solid mobile demand
- Expect solid demand amid new model competition in smartphone/tablet market
- Demand weakness in channel to continue
• System LSI : Expect solid demand from mobile devices to continue
((Source : SEC))
Samsung
S. LSI market outlook
ASSP for Smartphone
CMOS Image Sensor
& Tablet
( Bil))
($
($ Bil))
15
8
- NAND : Strengthen cost competitiveness and M/S by expanding 2Xnm portion
while focusing on set/embedded products
4
• System LSI
5
- Sustain growth momentum via ramp up of dual core mobile AP and
0
2010
2011
※ ASSP : Application-specific
standard products
- DRAM : Strengthen
g
product
p
mix with differentiated products
p
(e.g.
( g mobile/server)
/
)
and tech. leadership / cost competitiveness by expanding 3Xnm portion
10
0
• Memory
2010
2011
(Source : Gartner)
sales expansion of high-pixel image sensors
- Expand foundry customer base
6
DP
Q1 results
(Display Panel)
Large panel shipment (market)
• Panel demand declined QoQ due to demand growth slowdown in
(Million units)
173
58
'10.1Q
h
↓ QoQ, 4%↑
↑ YoY))
- Shipments
: ’’10.4Q 173M → ’’11.1Q 159M units ((8%↓
51
116
102
China and weak demand in developed markets amid seasonality
159
153
51
M k t
Market
· TV : Demand weakened due to seasonality and conservative inventory
management by set makers (12%↓ QoQ)
109
TV
IT
※ Despite downward panel ASP trend, blended ASP increased slightly
due to higher portion of new products (e.g.
(e g LED TV panels)
(’10.4Q $219 → ’11.1Q $223, 2%↑ QoQ)
'10.4Q
'11.1Q
(Source : Display Search, ’11.1Q)
Panel ASP (market)
( USD,, %))
ASP
’10.4Q
’11.1Q
Change
Note PC
48
49
2%
Monitor
70
72
4%
TV
219
223
2%
(Source : Display Search, ’11.1Q)
· IT : Weak demand due to slow set sales amid weak seasonality
(6%↓ QoQ)
However, demand for tablet panels remained strong
※ Blended ASP increased (NB 2%↑, MNT 4%↑) due to increased portion
of tablets and LED monitor panels, while panel makers adjusted
utilization rates amid worsened profitability
Samsung
• Total panel shipments decreased by high-single-digit% QoQ,
but increased approximately 10% YoY
-TV
TV : LED TV panel shipments increased despite decrease in total panel
shipments (high-10% ↑ QoQ)
- IT : Shipments of high value-added tablet panels continued to increase
(high-30% ↑ QoQ)
7
DP
Business outlook
(Display Panel)
2011 panel demand outlook
(market)
(Million units)
159
51
109
175
58
192
198
64
67
128
117
131
Market
• Expect demand increase due to new set product launches
in Q2 despite weak seasonality
- TV : Expect panel demand to increase, led by new product launches
and ASP to increase with increased portion of LED TV panels
TV
IT
- IT : Expect demand to grow QoQ in line with back-to-school demand
in North America and demand increase in China
→ Tablet
T bl t panell demand
d
d to
t increase
i
continuously
ti
l
※ As set makers’ overall panel inventory level is low,
panel demand may increase with inventory re-stocking
1Q
2Q
3Q
4Q
Samsung
g
(Source : Display Search, ’11.1Q)
11.1Q)
LED TV panel penetration rate
75%
(market)
56%
䨥 Focus on securing profitability by increasing the portion
of differentiated products and enhancing production
efficiency
• TV : Expand product line-up (e
(e.g.
g entry-level LED , 3D TV
panels) in addition to existing high-end products and
strengthen customer base
- 1-side LED, entry-level 3D, and emerging market-specific panels
((32” and smaller panels),
p
), etc.
21%
2%
2009
•
2010
2011
2012
(Source : Display Search, ’11.1Q)
IT : Increase sales of tablet panels and
reinforce high value-added product line-up
(e.g. slim, wide view angle, LED, and 3D)
8
Telecommunication
Shipment (tablet included)
(Million units)
81
Portion of
Smartphone
64
70
Q1 results
Handset
• Shipment : 70 million units (9%↑ YoY, 14%↓ QoQ)
- Smartphone shipments increased while total shipments decreased under
weak seasonality
- Smartphone : Shipment continued to grow (QoQ 16%↑) with full product line-up
high end products (Galaxy S, WaveII, etc.) and
· Sustained strong sales of high-end
increased shipments of mass models (Galaxy Ace, Galaxy mini, Wave525, etc.)
4%
14%
18%
10.1Q
’10.1Q
’10
10.4Q
4Q
’11.1Q
Q
ASP
$140
- Portion of smartphone continued to increase : ‘10.4Q
10.4Q 14% → ‘11.1Q
11.1Q 18%
Network
$130
• Sustained sales growth (YoY) via expansion of domestic & overseas
$120
LTE business, upgrade of domestic 3G network, etc.
$110
䨥 Profitability of Telecommunication business improved
$100
QoQ and YoY due to solid earnings of both Handset
$90
$80
• ASP increased QoQ due to enhanced product mix
and Network businesses despite weak seasonality
‘10.1Q
2Q
3Q
4Q
’11.1Q
9
Telecommunication
Market
Handset market
Smartphone
(Billion units)
Feature phone
10%+
1.5 +
Business outlook
•
Q2 : Expect demand to increase slightly QoQ amid weak seasonality
- Smartphones and Emerging market to drive industry demand growth
· Replacement demand for premium smartphones and demand for
1.36
mass market models to increase continuously
· Emerging market : Mid/Low-end Smartphone and Feature phone demand
to increase continuously
- Tablet : Product & Price competition to intensify with new model launches
30%+
Approx. 0.4
Samsung
Approx. 0.3
2010
2011
Strategic models
[Smartphone/tablet]
[Mass market smartphone]
• Target to outperform the industry growth in Q2
- Sustain smartphone sales growth with new model launches
· Flagship models : Galaxy S II (Global), 4G Smartphone (US), etc.
pa d mass
ass market
a et models
ode s to add
address
ess de
demand
a d by different
d ee tp
price
ce ranges
a ges
· Expand
- Strengthen tablet line-up with the launch of Galaxy Tab 10.1
- Enhance retail channel competitiveness in the emerging market
☞ Expand global M/S and Maintain a double-digit operating margin
Galaxy S II Galaxy Tab 10.1
(Android)
(Android)
Galaxy Ace Galaxy mini
(Android) (Android)
• Network : Expect sales to grow with new LTE business in USA/Asia
and expansion of M-WiMAX & domestic 3G services
10
DM & A
TV
FPTV market
(Million units)
Samsung (Left)
12.0
Market (Right)
80 0
80.0
60.0
8.0
40.0
4.0
20.0
20 0
-
1Q'10
4Q'10
1Q'11
(Source : Display Search, Mar 2011)
DA emerging market portion
(CIS/Latin America)
(%)
20%
REF
Q1 results
(Digital Media & Appliances)
W/M
A/C
• Market : Demand increased slightly YoY,
but demand decreased QoQ under weak seasonality
• Samsung : FPTV shipment 8.8 M units (YoY 5%↑,
↑ QoQ 31%↓)
↓
- Shipment portion of large size/LED TVs increased continuously
in both developed and emerging markets
ㆍ LED TV shipment
p
grew substantiallyy in emerging
g
g g markets ((YoY 420%↑))
※ LED TV shipment portion increased : ’10.4Q 33% → ’11.1Q 39%
Digital Appliances
• Sales increased by low 10% YoY, driven by solid sales in emerging
markets (CIS, Latin America, etc.) and enhanced competitiveness of
premium products in Europe
- Sales growth in emerging markets(CIS, Latin America, etc.) : low-50%↑ YoY
ㆍ Revenue portion of emerging market : ’10.1Q 13% → ’11.1Q 17%
- Sales increase of premium products (REF, W/M, A/C) : mid-10% YoY
10%
0%
1Q'10
1Q'11
☞ Di
Digital
it l Media
M di & Appliances
A li
business
b i
turned
t
d profitable
fit bl QoQ
Q Q due
d
to increased sales of premium TV & IT products and improved
performance of Appliances business despite weak seasonality
11
DM & A
Market
k
FPTV market
(Million units)
3%
50
46
51
• FPTV : Market demand to increase by 11% YoY and by 3% QoQ in Q2
- Expect solid demand growth for LED and 3D TVs amid continuous price competition
· LED TV portion to increase : ’10.4Q 30% → ’11.1Q 38% → 2Q 45%
- Growth momentum in emerging markets to lead market growth
despite demand slowdown in developed markets
LED
· Emerging markets demand to grow 21% YoY in Q2
LCD
• Appliances : Demand for major products (REF, W/M, and A/C)
PDP
to increase by 4% YoY
2Q'10
1Q'11
2Q'11
(Source : Display Search, Mar 2011)
DA market
REF
300
300 Business outlook
(Digital Media & Appliances)
250
W/M
A/C
260
(Million units)
4%
270
Samsung
g
• FPTV : Focus on growth and profitability by sales expansion
of new product line ups
- Developed markets : Expand product line-up and sales channels of
premium products (3D TVs, smart TVs, etc.)
- Emerging markets : Expand sales of regional strategic models
200 • Appliances : Focus on sales increase and profitability
by strengthening product competitiveness and
enhancing global SCM
100 - New model launch : premium / eco-friendly products, etc
‐
2009
2010
2011
(AHAM, GFK, SEC estimates)
- Enhancing efficiency : strengthening overseas operations and global SCM, etc
12
[Appendix 1] Statement of Financial Position (K-IFRS)
(Unit : KRW 100 Million)
1Q '11
(A)
Current Assets
4Q '10
(B)
1Q '10
(B)
Q-on-Q
(A - B)
Y-on-Y
(A - C)
609,571
614,026
552,967
-4,455
56,604
223,408
224,800
206,433
-1,392
16,975
- A/R
177,433
191,531
170,209
-14,098
7,224
- Inventories
141,763
133,645
117,162
8,118
24,601
66,967
64,050
59,163
2,917
7,804
755,751
728,861
597,991
26,890
157,760
- Investment
121,801
118,007
95,859
3,794
25,942
- PP&E
551,821
529,646
440,290
22,175
111,531
- Intangible Assets
28,714
27,802
17,750
912
10,964
- Other Non Current Assets
53,415
53,406
44,092
9
9,323
1,365,322
1,342,887
1,150,958
22,435
214,364
450,334
449,397
398,568
937
51,766
115,478
107,754
82,511
7,724
32,967
- Trade Accounts and N/P
97,026
91,487
104,561
5,539
-7,535
- Other Accounts and N/P
& Accrued Expenses
142,226
150,494
125,694
-8,268
16,532
- Income Tax Payable
16,839
20,515
11,759
-3,676
5,080
- Unearned Revenue &
Other Advances
15,378
13,988
9,590
1,390
5,788
- Other Liabilities
63,387
65,159
64,453
-1,772
-1,066
914,988
893,490
752,390
21,498
162,598
8,975
8,975
8,975
0
0
1,365,322
1,342,887
1,150,958
22,435
214,364
- Cash
※
- Other Current Assets
Non Current Assets
Total Assets
Liabilities
- Debts
Shareholders' Equity
- Capital Stock
Total Liabilities &
Shareholder's Equity
※ Cash = Cash + Cash equivalent + Short-term financial instruments + Marketable securities
[Appendix 2] Income Statement (K-IFRS)
(Unit : KRW 100 Million)
1Q '11
(A)
Sales
Cost of Sales
Gross Profit
4Q '10
%
369,850
(B)
100% 418,711
1Q '10
%
(C)
%
Y-on-Y
(A - B)
(A - C)
100%
-48,861
23,469
260,544 70.4% 291,156 69.5% 230,086 66.4%
-30,612
30,458
109,306 29.6% 127,555 30.5% 116,295 33.6%
-18,249
-6,989
5.9%
-833
2,912
55,413 16.0%
-14,054
2,498
R&D
23,441
SG&A
57,911 15.7%
6.3%
24,274
100% 346,381
Q-on-Q
5.8%
71,965 17.2%
20,529
- Wages & Fee
15,458
4.2%
16,774
4.0%
13,309
3.8%
-1,316
2,149
- Marketing Expenses
17,197
4.6%
25,591
6.1%
18,083
5.2%
-8,394
-886
1,531
0.4%
-1,193
-0.3%
3,703
1.1%
2,724
-2,172
29,485
8.0%
30,123
7.2%
44,056 12.7%
-638
-14,571
3,756
1.0%
6,946
1.7%
4,617
1.3%
-3,190
-861
636
0.2%
-889
-0.2%
1,056
0.3%
1,525
-420
- Interest Gain (or Loss)
116
0.0%
-164
0.0%
103
0.0%
280
13
- F/X Gain (or Loss)
520
0.1%
-725
-0.2%
953
0.3%
1,245
-433
33,878
9.2%
36,180
8.6%
49,729 14.4%
-2,303
-15,852
6,030
1.6%
1,976
0.5%
2.8%
4,054
-3,762
27,847
7.5%
34,204
8.2%
39,938 11.5%
-6,357
-12,090
Other
Operating Profits
Operating Profits
Gain(or Loss) on Equity
Method Investment
Finance Incomes
/ Expenses
Income Before
Income Taxes
- Income Taxes
Net Income
9,792