Samsung sales, profits higher in Q1

Samsung Electronics reported higher sales and profits for the first quarter of 2006, helped by strong sales of LCD (liquid crystal display) panels, the company said Friday.

Net profit for the quarter was 1.9 trillion won ($2 billion as of March 31, the final day of the period being reported), up 25 percent on the first quarter of 2005, and sales were 14 trillion won, up one percent on the same period last year.

However, with the exception of its LCD business Samsung saw sales fall in each of its other business units: semiconductors, telecommunications, digital media, and home appliances.

"On the business front, the overall environment remained challenging in the first quarter with a weaker seasonal IT market, higher oil prices and Korean won appreciation," said Chu Wooksik, senior vice president of investor relations at Samsung, in a telephone conference call. "However, we have continued to produce solid results through difficult circumstances."

LCD panel sales jumped 41 percent on the same quarter a year ago to 2.7 trillion won on the back of strong demand for large size panels for flat-panel televisions. Samsung shipped more than two million large-size panels during the quarter and couldn't keep up with customer demand, said Cho Yeong Duk, vice president of the LCD business unit.

"Size growth of LCD TVs have been much faster than we expected and we will continue to focus on 40-inch and above," said Cho. Samsung expects to ship 2.7 million large-size panels during the current quarter.

Samsung's semiconductor business unit saw sales drop three percent on the same period last year. The NAND flash memory market was weak but demand for DDR2 computer memory was strong and prices rose thanks to greater demand from PC makers. Samsung said the average amount of memory per PC rose during the quarter to 705M bytes per system.

Shipments of cell phones hit a record 29 million units during the quarter, although sales in the overall telecom business unit dropped five percent on the first quarter of 2005. The average selling price of phones dropped both at home and overseas but demand was higher in the South Korean market, the company said.

For the entire year Samsung expects the global cell phone market to hit 910 million units, up 13 percent on 2005, with its own share being 115 million units. This would give it a market share of 12.7 percent, which would be unchanged on 2005.

In the digital media business, demand was strong for LCD televisions, with sales hitting about one million sets, up around three-fold from last year, said David Steel, vice president of the digital media unit. Sales of TVs are expected to be helped by the soccer World Cup in June. Samsung is also enjoying higher sales of printers, he said.

For the current quarter, Samsung said it expects to see better results.

"We expect the second quarter market environment to be quite challenging," Chu said. "But at the same time we believe ... that a turn-around will occur sometime during the quarter for our businesses."