Earnings Release

Earnings Release Q2 2011
S
Samsung
Electronics
El t i
July 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 Q2 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
2Q ’11
(% of sales)
Y-on-Y
2Q ’10
(% of sales)
1Q ’11
(% of sales)
39.44
100%
4%↑
37.89
100%
36.99
100%
Cost of Sales
26.83
68.0%
9%↑
24.53
64.7%
26.05
70.4%
Gross Profit
12.61
32.0%
6%↓
13.37
35.3%
10.93
29.6%
R&D expenses
2 46
2.46
6 2%
6.2%
7%↑
2 31
2.31
6 1%
6.1%
2 34
2.34
6 3%
6.3%
SG&A expenses
6.37
16.2%
0.3%↑
6.36
16.8%
5.79
15.7%
△0.02
△0.1%
-
0.31
0.8%
0.15
0.4%
3 75
3.75
9.5%
25%↓
5 01
5.01
13.2%
2 95
2.95
8.0%
Equity method gains / losses
0.41
1.0%
26%↓
0.55
1.5%
0.38
1.0%
Finance incomes / expenses
0.002
0.01%
-
△0.25
△0.7%
0.06
0.2%
Profit Before Income Tax
4.16
10.6%
22%↓
5.31
14.0%
3.39
9.2%
I
Income
tax
t
0 66
0.66
1 7%
1.7%
37%↓
1 04
1.04
2 7%
2.7%
0 60
0.60
1 6%
1.6%
Net profit
3.51
8.9%
18%↓
4.28
11.3%
2.78
7.5%
(Unit: Trillion Won)
Sales
Other operating profits /
losses
Operating Profit
Key Profitability Indicators
2Q ’11
11
2Q ’10
10
1Q ’11
11
15%
22%
12%
Profitability (Net income/Sales)
0.09
0.11
0.08
Asset turnover (Sales/Asset)
1 16
1.16
1 27
1.27
1 09
1.09
Leverage (Asset/Equity)
1.48
1.54
1.50
17%
20%
16%
ROE
EBITDA Margin
2Q ’10
1Q ’11
2Q ’11
1
Segment Information
Sales by Segment
(Unit: Trillion Won)
2Q ’11
Y-on-Y
2Q ’10
1Q ’11
Semiconductor
9.16
4%↓
9.53
9.18
- Memory
5.89
12%↓
6.71
5.87
7 09
7.09
9%↓
7 76
7.76
6 51
6.51
5.76
15%↓
6.80
5.27
12.18
43%↑
8.52
10.64
11.69
45%↑
8.05
10.14
14 07
14.07
5%↓
14 80
14.80
13 52
13.52
DP
- LCD
Telecom
- Mobile
DM & A
7.86
11%↓
8.85
7.68
Others
- VD
△3.06
-
△2.72
△2.86
Total
39.44
4%↑
37.89
36.99
※ Sales of each segment include intersegment sales
Operating Profit by Segment
2Q ’11
(Margin)
Y-on-Y
2Q ’10
(Margin)
1Q ’11
1.79
19.6%
11.3%p↓
p↓
2.94
30.9%
1.64
△0.21
△3.0%
14.3%p↓
0.88
11.3%
△0.23
Telecom
1.67
13.7%
6.3%p↑
0.63
7.4%
1.43
DM & A
0.51
3.6%
1.2%p↑
0.36
2.4%
0.10
(Unit: Trillion Won)
Semiconductor
DP
Others*
Total
△0.01
0.01
3.75
※ Other businesses & Other operating profits/losses
0.20
9.5%
3.7%p↓
5.01
0.01
13.2%
2.95
※ Since SetTop Box business belonging has been changed (from Telecom to
DM & A), related 2010 earnings have been re-stated
2
Cash Flow Statement
2Q ’11
’
(Unit: Trillion Won)
Cash (Beginning of period)*
1Q ’11
’
22.34
22.48
4.57
4.34
Net profit
3 51
3.51
2 78
2.78
Depreciation
3.15
2.98
△2.09
△1.42
△6.06
△5.95
△5.65
△5.53
Cash flow from Finance
△1.68
1.43
Increase in debts
△0.60
1.04
Net increase in cash
△3 27
△3.27
△0 14
△0.14
Cash (End of period)*
19.07
22.34
Cash flow from Operation
Others
Cash flow from Investment
Increase in tangible assets
* Cash = Cash + Cash equivalents + Short-term financial instruments + Short-term available-for-sale securities
Cash & Net Cash Position
22.48
22.34
11 70
11.70
10 79
10.79
21.79
20.43
10.06
10 78
10.78
19 07
19.07
8.10
’10 2Q
’10 3Q
’10 4Q
’11 1Q
’11 2Q
3
Statement of Financial Position
2Q ’11
11
1Q ’11
11
2Q ’10
10
Current assets
59.44
60.96
60.69
Cash*
19.07
22.34
20.43
Trade accounts & notes receivable
19.90
17.74
19.67
Inventories
14.06
14.18
13.82
Non-current assets
78.53
75.58
64.99
Investments
12.35
12.18
10.49
PP&E
57.38
55.18
47.07
137.97
136.53
125.68
10.97
11.55
10.37
Total liabilities
43.36
45.03
43.98
Total shareholders’ equity
q y
94.61
91.50
81.70
(Unit: Trillion Won)
Total assets
Debts
* Cash = Cash + Cash equivalents + Short-term financial instruments + Short-term available-for-sale securities
Key Financial Indicators
2Q ’11
1Q ’11
2Q ’10
163%
160%
160%
Liability/Equity
46%
49%
54%
Debt/Equity
12%
13%
13%
△9%
△12%
△12%
Current ratio*
Net debt/Equity
* Current ratio= Current Assets / Current Liabilities
4
Semiconductor
PC shipment
(Million unit)
100
Desktop
NotePC
Netbook
GB/Sys
80
(GB/Sys)
5.0
4.0
60
3.0
40
2.0
20
1.0
0
0.0
'10.Q2
'11.Q1
Q2 (Source: SEC)
Memory spot price trend
$4.00
1Gb DDR3 DRAM(Left)
$8.00
32Gb MLC NAND (Right)
$3.00
$6 00
$6.00
2Q results
M
Memory
• DRAM : Weak consumer PC demand but solid demand
continued for mobile & server applications amid a low season
- PC shipment
p
: low-single-digit↑(QoQ,
g
g ↑(Q Q, YoY),
),
ㆍGB/Sys : high-single-digit ↑ (QoQ) , mid-10% ↑(YoY)
☞ Samsung : Strengthened cost competitiveness via 3Xnm migration,
secured profitability by reinforcing and differentiating
high value-added product lineup (mobile and server DRAM, etc.)
• NAND : Strong Set/ Embedded market demand while
channel demand was weak due to low seasonality
- Solid demand for mobile applications such as smartphones and tablets, etc.
- Spot
p prices
p
declined due to weak channel demand (e.g.
( g memoryy card)) and
low-priced products of some makers
☞ Samsung : Enhanced cost competitiveness by accelerating 2Xnm migration,
and secured profitability via expanded sales to Set/ Embedded
markets
System LSI
$2.00
$4.00
$1.00
※ 1Gb DDR3 1.3Ghz (Q2) :
solid demand increase for AP and high-pixel
high pixel image sensors
for mobile devices, etc
8%QoQ↓
32Gb MLC (Q2) : 22%QoQ↓
$0.00
'10.Q3
Q4
'11.Q1
• Strong demand for high-end mobile devices sustained
$2.00
Q2
(Source: DRAM Exchange, SEC)
☞ Samsung : Sales and profitability improved due to sales expansion of
dual core AP and high-pixel BSI image sensor, etc
5
Semiconductor
Market outlook
Memory
Memory in smartphone and tablet
(GB/Sys)
1.0
(GB/Sys)
DRAM
0.5
NAND
40
despite remaining concerns (inventory issues, etc.)
20
- Expect mild 3Q seasonality : PC shipment high-single-digit↑ (QoQ)
GB/Sys: high-single-digit ↑ (QoQ)
· 2011 Annual PC shipment : low-single-digit ↑, GB/Sys: low-20% ↑
- Demand from server and mobile applications to remain solid, but competition
to intensify due to supply growth
Smartphone
h
Tablet
0
0.0
2010
2011
2010
2011
(Source: SEC)
S.LSI market outlook
ASSP for smartphone
& tablet
CMOS image sensor
($B)
($B)
15
6
10
4
5
2
0
2011
•
NAND : Expect positive effects from new product launches
amid peak season
- Expect tight demand
demand-supply
supply due to new model launches of smartphones and
tablets
· Expect strong SSD demand backed by increase in data centers and ultra-thin
note PC shipment
- Channel demand expected to remain weak by mid-3Q
mid 3Q
System LSI
• Expect demand increase amid peak seasonality
- Demand for dual core AP, BSI image sensors, etc. to pick up, supported by strong
demand for high-end mobile devices
0
2010
• DRAM : Expect PC demand to increase due to seasonality
2010
2011
(Source: Gartner, SEC)
6
DP
2Q results
(Display Panel)
Large panel shipment (market)
Market
(Million unit)
167
160
55 50 174
• Panel demand increased limitedly due to weaker SET demand
led by low seasonality and slow recovery in advanced markets
53 TV
112
112 IT
121 110 110
- Shipments : ’11.1Q 160M units → ’11.2Q 174M units (8%↑ QoQ, 4%↑ YoY)
· TV : Demand increased slightly due to pull-in demand in preparation for peak
season and Chinese National Day. But panel inventory levels rose up
due to sluggish SET sales
※ Blended ASP increased with higher portion of LED panels and new
'10.2Q
'11.1Q
model launches while price for 40-inch+ panels continued to fall
'11.2Q
(Source : Display Search, ’11.2Q)
· IT : Demand grew ahead of peak season amid strong tablet demand
※ Blended ASP of monitor panels increased due to limited supply
and SET makers’ pull-in demand to prepare for peak season
Panel ASP (market)
(USD,, %)
(U
`11.1Q `11.2Q
Chg.
Note PC
15.6”LED
44
45
2%
Monitor
20”LED
20
LED
66
69
5%
TV
46”LED
476
451
-5%
(Source : Display Search, ’11.2Q)
Samsung
• Total panel shipment increased by the mid-10% (QoQ, YoY)
- TV : LED TV panel shipment continued to increase
- IT : High value-added tablet panel shipment kept growing
7
DP
Market outlook
(Display Panel)
2011 panel demand outlook
(market)
(Million unit)
160
50
110
184
174
63
53
185
• Expect demand to increase slightly in 3Q despite peak
season due to global economic uncertainties like financial
crisis in Europe
62
- Shipment : ’11.2Q 174M units → ’11.3Q 184M units (6%↑ QoQ, 16%↑ YoY)
121
121
123
TV
IT
- TV : Expect panel demand to increase ahead of peak season and
LED TV portion to increase
→ Demand growth could be lower than expected in case of conservative
inventory management by Set makers
1Q
2Q
3Q
4Q
(S
(Source
: Display
Di l Search,
S
h ’11.2Q)
’11 2Q)
LED TV panel penetration rate
(market)
71%
sluggish sales in Europe amid financial crisis
• Note PC : Despite peak seasonality, expect demand to increase slightly due
to high level of inventories in Europe
→ Expect tablet panel demand to keep increasing
51%
21%
• Expect delayed ramp-up of new production lines
industry wide amid weak demand and inventory issues
industry-wide
2%
2009
- IT : Demand expected to remain flat QoQ due to increasing inventory levels and
2010
2011
2012
(Source : Display Search, ’11.2Q)
8
Telecommunication
Handset
Flagship Model
• Shipment : High 10% ↑ YoY (high single-digit ↑ QoQ)
[Premium Smartphone]
Galaxy S II
(Android)
2Q results
Galaxy S
(Android)
- Our shipment increased across all regions while market demand increased
slightly QoQ
- Smartphones : Strong growth in developed markets through
strengthened line-ups in mid / high-end segments
· Sales for high-end products increased with successful launch of Galaxy S2
[Mass-market Smartphone]
· Sales for mass-market models launched in Q1 (Galaxy Ace, mini, Gio, etc.)
continued to grow
Galaxy Ace
(Android)
Galaxy mini
(Android)
Galaxy Gio
(Android)
- Featurephones : Shipment decreased slightly QoQ amid market demand
slowdown
• ASP : Low 10% increase QoQ
- Improved product mix due to strong smartphone sales
[Tablet PC]
Network
Galaxy Tab 10.1
(Android)
Galaxy Tab (7”)
(Android)
• Sales and profitability improved YoY due to demand
increase led by expansion of domestic / overseas LTE
network and upgrade of domestic 3G network
9
Telecommunication
Handset Demand
Smartphone
Featurephone
•
Market outlook
2H : Expect demand to increase over 15% HoH due to
strong seasonality
3Q : Expect market demand to increase by high singledigit QoQ
15%+ Approx. 830mil.+
- Smartphones : While global demand is expected to grow continuously(19%+↑ HoH),
competition within the industry is also likely to be intensified
Approx.
pp
720mil.
14%+ Approx. 580mil.+
· Developed markets : Expect strong demand for smartphone to continue with
new LTE models , etc.
 LTE service expansion in US, smartphone line-up enhancement among
Approx. 510mil.
EU carriers
· Emerging markets : Expect mass-market smartphone models to lead demand
Approx 210mil.
Approx.
210mil
’11. 1H
19%+
Approx. 250mil.+
’11. 2H
(Source: SA, Securities)
growth along with 3G service expansion
 China, Latin America, MEA, etc.
- Feature phones : While demand to grow (14%+↑ HoH) due to seasonality,
price pressure to intensify due to increased mass market
smartphones
- Tablets : Expect market demand to increase with new model launches, etc.
10
DM & A
FPTV demand & SEC LED TV portion
Market demand (Left)
2Q results
(Digital Media & Appliances)
(Million unit, %)
LED TV portion (Right)
100%
50.0
TV
• Market : FPTV demand increased by mid-single-digit↑QoQ
(high single-digit↑YoY) due to slow recovery of
developed markets and weak seasonality
- Emerging market demand (Latin America, Asia, etc.) increased by about 20%
50%
-
• Samsung : Shipment increased in line with market growth,
0%
2Q'10
1Q'11
and profitability improved QoQ
2Q'11
(Source : Display Search Jun. ’11)
DA Revenue
(Korean Won)
DA Total
- Enhanced strategic new model line-ups & increased portion of premium products
- Continuous increase of large-size / LED TV portion both in developed and
emerging markets
ㆍLED TV portion out of LCD TV sales : Approximately 50% in 2Q
Premium Products
Digital Appliances
20%↑
• Amid sales increase in the emerging markets and
strong sales in domestic/developed markets, our profitability
improved QoQ due to increased portion of premium products
30%↑
1Q
- LCD TV demand grew by mid-single digit, supported by solid emerging market
demand. However, sales decreased in Europe and in China.
2Q
1Q
2Q
- Revenue grew in major emerging markets (Latin America, MEA, etc.)
- Strong sales growth of A/C and REF, with increased portion of premium products
11
DM & A
FPTV market outlook
TV
(Million unit)
57
50
Market outlook
(Digital Media & Appliances)
• FPTV : Expect mid-10% growth in 3Q (QoQ) backed by peak
seasonality
50
- Price competition to intensify amid increasing demand for LED and 3D TVs
LED
· Expect expanded portion of LED TVs within the LCD TV segment :
low 40% in Q2→ high 40% in Q3
LCD
- Strong emerging market demand to lead global market growth, while demand in
PDP
developed markets expected to be stagnant
3Q'10
2Q'11
3Q'11
(Source : Display Search Jun.’11)
DA market outlook
(Million unit)
250
260
60
· Demand in emerging market expected to grow by high 20% QoQ
(China : about 40% growth)
※ Uncertainties to persist in developed markets such as slow economic recovery in US
and fiscal crises in Europe
Digital Appliances
273
• While uncertainties remain in developed markets, overall
demand for appliances expected to increase slightly in 3Q
mainly driven by emerging market demand
- Emerging markets (Latin America,
America China,
China etc.)
etc ) expected to lead global appliances
market growth
(Source : AHAM, GFK, SEC estimates)
12
[Appendix 1] Statement of Financial Position (K-IFRS)
(Unit : KRW 100 Million)
2Q '11
(A)
Current Assets
1Q '11
(B)
2Q '10
(B)
Q-on-Q
(A - B)
Y-on-Y
(A - C)
594,445
609,571
606,912
-15,126
-12,467
190,714
223,408
204,285
-32,694
-13,571
- A/R
199,020
177,433
196,702
21,587
2,318
- Inventories
140,604
141,763
138,249
-1,159
2,355
62,443
66,967
67,676
-4,524
-5,233
785,253
755,751
649,855
29,502
135,398
- Investment
123,534
121,801
104,875
1,733
18,659
- PP&E
573,806
551,821
470,665
21,985
103,141
- Intangible Assets
33,279
28,719
27,364
4,560
5,915
- Other Non Current Assets
54,634
53,410
46,951
1,224
7,683
1,379,697
1,365,322
1,256,767
14,375
122,930
433,615
450,334
439,801
-16,719
-6,186
109,696
115,478
103,669
-5,782
6,027
- Trade Accounts and N/P
89,556
97,026
97,506
-7,470
-7,950
- Other Accounts and N/P
& Accrued Expenses
145,331
142,226
148,657
3,105
-3,326
- Income Tax Payable
10,906
16,839
15,133
-5,933
-4,227
- Unearned Revenue &
Other Advances
16,066
15,378
12,130
688
3,936
- Other Liabilities
62,060
63,387
62,706
-1,327
-646
946,082
914,988
816,966
31,094
129,116
8,975
8,975
8,975
0
0
1,379,697
1,365,322
1,256,767
14,375
122,930
- 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)
2Q '11
(A)
Sales
Cost of Sales
Gross Profit
1Q '11
%
394,389
(B)
100% 369,850
2Q '10
%
(C)
%
Y-on-Y
(A - B)
(A - C)
100%
24,539
15,470
268,272 68.0% 260,544 70.4% 245,257 64.7%
7,728
23,015
126,117 32.0% 109,306 29.6% 133,662 35.3%
16,811
-7,545
6.1%
1,200
1,585
63,557 16.8%
5,829
183
R&D
24,641
SG&A
63,740 16.2%
6.2%
23,441
100% 378,919
Q-on-Q
6.3%
57,911 15.7%
23,056
- Wages & Fee
15,977
4.1%
15,458
4.2%
14,605
3.9%
519
1,372
- Marketing Expenses
21,877
5.5%
17,197
4.6%
22,551
6.0%
4,680
-674
-217
-0.1%
1,531
0.4%
3,093
0.8%
-1,748
-3,310
37,519
9.5%
29,485
8.0%
50,142 13.2%
8,034
-12,623
4,107
1.0%
3,756
1.0%
5,529
1.5%
351
-1,422
20
0.0%
636
0.2%
-2,531
-0.7%
-616
2,551
170
0.0%
116
0.0%
18
0.0%
54
152
-150
0.0%
520
0.1%
-2,548
-0.7%
-670
2,398
41,646 10.6%
33,878
9.2%
53,140 14.0%
7,768
-11,494
2.7%
552
-3,788
42,769 11.3%
7,217
-7,705
Other
Operating Profits
Operating Profits
Gain(or Loss) on Equity
Method Investment
Finance Incomes
/ Expenses
- Interest Gain (or Loss)
- F/X Gain (or Loss)
Income Before
Income Taxes
- Income Taxes
Net Income
6,582
1.7%
6,030
1.6%
35,064
8.9%
27,847
7.5%
10,370