Samsung ends 2016 on a high with better profitability in Q4

Samsung today released their Q4 2016 results and it looks pretty for the Korean conglomerate despite being a difficult year. The quarter that ended on December 31, 2016 recorded a revenue of 53.33 trillion won and recorded an operating profit for the quarter at 9.22 trillion won. For the whole year, Samsung posted a revenue of 201.87 trillion won and operating profit of 29.24 trillion won.

The quarter earnings relied heavily on the components business as the mobile division was weighed down by Galaxy Note7’s recall. However, the mobile business did register positive returns year-on-year (YoY) due to the sales of Galaxy S7 series and better profitability of mid-to-low end handsets.

The company’s total capital expenditure (CAPEX) for 2016 stood at 25.5 trillion won but hasn’t finalised anything for 2017.

Here’s a breakdown of individual businesses.

Semiconductors:
The semiconductors business that comprises of Memory and System LSI divisions posted consolidated revenue of 14.86 trillion won and an operating profit of 4.95 trillion won.

The memory division saw a strong quarter due to high profitability and a differentiated product mix whereas the NAND division saw a demand for SSDs despite the restricted supply. The System LSI business also saw an increase in numbers due to sales of mid-to-low end mobile AP and image sensors due to growth of China’s mobile market.

Going forward, Samsung expects weak seasonality demand but given the limited supply of components, there’s a possibility of strong demand due to restricted supply. For the System LSI division, Samsung will concentrate for 14nm products for mid-to-low-end devices as well as ramping up the production for its 10nm products.

Display Panel:
The Display Panel division recorded a revenue of 7.42 trillion won and an operating profit of 1.34 trillion won due to increased shipments of OLED panels and improved earnings of LCD TV panels. Samsung’s OLED panel demand remains strong, thanks to new customers and reduction in production cost.

In 2017, Samsung expects demand for its OLED panels but weak demand for its LCD panels in the first quarter.

IT & Mobile Communications:
The IT & Mobile Communications division saw an increase of revenue YoY due to strong sales of Galaxy S7 and Galaxy S7 edge. The business posted 23.61 trillion won in consolidated revenue and operating profit of 2.50 won.

Samsung expects the coming quarter to be weak due to seasonality demand but will enhance its mid and low-range offerings with water and dust resistance capabilities and introduce AI services in premium devices.

Consumer Electronics:
The CE division consists of Visual Display (VD), Digital Appliances (DA), Printing Solutions and Health and Medical Equipment (HME) businesses and cumulatively, the division posted consolidated revenue of 13.64 trillion won and a profit of 0.32 trillion won.

The global TV demand remained same YoY but Samsung expects it to increase slightly. Moreover, Samsung sees a rising demand for its premium UHD models.

The DA business saw demand fall in emerging markets but sustained in developed markets like North America.