SEOUL: Samsung Electronics said Friday fourth-quarter net profit rose to 3.42 trillion won ($3.07 billion) but forecast a challenging few months ahead after a record-setting year.The world's largest maker of memory chips and flat-screen televisions announced net profit was up 13 percent on October-December 2009, thanks to a strong performance in smartphones and semiconductors.
Operating profit was 3.01 trillion won, a 12.4 percent fall from a year earlier, while sales rose 6.7 percent to 41.87 trillion won.The company, which accounts for 20 percent of the country's exports, finished 2010 with a record net profit of 16.15 trillion won. Operating profit was also a record at 17.3 trillion won, as was revenue at 154.63 trillion.
The consolidated results cover domestic and overseas operations.Samsung, the world's second largest mobile phone maker after Nokia, said its fourth-quarter performance continued to be driven by memory chips and strong smartphone sales. It said its flagship Galaxy S phone introduced in June has sold 10 million units worldwide.
Overall, Samsung shipped 80.7 million mobile phones in the fourth quarter, up 17 percent year-on-year. But quarter-on-quarter, profit margins fell due mainly due to weakening pricing for chips and LCD panels, as well as price competition in the TV market.
"Despite the difficult business environment including reduced IT demand caused by the economic slowdown, we achieved record-high results both in terms of sales and operating profit in 2010," said vice-president Robert Yi in a statement."However, considering overall business conditions, unlike 2010, we expect the traditional earnings pattern of a weak first half, with a strong second half to return in 2011."
The firm sees greater price competition in consumer electronics, IT and mobile devices, while major components prices are also forecast to decline. Samsung said it would focus on making its semiconductors more cost-competitive, cutting marketing expenses and increasing shipments of high-end smartphones and tablet devices.It forecast capital spending of 23 trillion won this year, compared with 21.6 trillion in 2010.
The overall profit figure was better than expected. Seven economists polled by Dow Jones Newswires had on average forecast a net profit of 3.05 trillion won.Analysts forecast tough market conditions in coming months, since demand for chips, flat-screen TVs and mobile phones typically slows down in January-March after the holiday shopping season.
They said competition for high-margin products such as smartphones and tablet computers was also expected to intensify this year with more manufacturers jumping into the market.
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