Samsung today published their financial result for the third quarter of this year that ended on September 30, 2014. The company registered a revenue of 47.45 trillion won, down 9 percent Quarter-on-Quarter (QoQ) and an operating profit of 4.06 trillion won. This, in comparison with Q3 2013, the earnings are substantially down that stood at 59.08 trillion won and 10.16 trillion won respectively.
Samsung says although the sales volume of smartphones increased this quarter, the earnings fell for the second consecutive quarter due to reduction in prices and increased sales of mid-range handsets.
Going in the fourth quarter, Samsung “cautiously” expects the earnings to rise considering it will be a holiday season quarter with seasonal demand for consumer electronics, which will also drive demand for components.
As far as capital expenditure (CAPEX) goes, the company invested 4.3 trillion won that takes the total CAPEX for this year to 14.5 trillion.
Semiconductors:
Samsung now recognises the semiconductors business as Device Solutions (DS) and the division recorded a consolidated revenue of 16.29 trillion won and 2.33 trillion won in operating profit.
The Memory Business had a stable demand but the System LSI Business saw its earnings drop due to weaker demand and customer component inventory correction.
In Q4 2014, Samsung expects the Memory Business to have a stable supply and demand whereas the System LSI Business will find ways to improve its performance by increasing supply of 20nm mobile APs and expanding sales of LSIs.
Display Panel:
The Display Panel division posted an operating profit of 60 billion won on a consolidated revenue of 6.25 trillion won.
Surprisingly, strong LCD panel demand compensated for lower OLED panel sales and expects LCD panels to hold its momentum due to the rising demand of larger-sized display panels in the next quarter.
IT & Mobile Communications:
The IT & Mobile Communications division – comprising of Mobile Communications, Telecommunication Systems, IT Solutions and Digital Imaging – recorded a revenue of 24.58 trillion won in consolidated revenue and 1.75 trillion won in operating profit.
The drop in earnings was due to the ASP of handsets and increased sales of entry-level and mid-range handsets. The tablet sales and revenue were on the rise due to the launch of Galaxy Tab 4 and Galaxy Tab S range.
This quarter, Samsung expects the market demand to increase further but braces itself for intense competition from other manufacturers.
Consumer Electronics:
The CE Division includes the Visual Display (VD), Digital Appliances (DA), Printing Solutions and Health and Medical Equipment (HME) Businesses. The division posted an operating profit of 50 billion won on a consolidated revenue of 11.6 trillion won.
The decrease in profitability was due in part to a decrease in TV ASP and slowdown in air-conditioner sales,
For Q4 2014, Samsung looks to improve profitability by taking advantage of the holiday season.
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