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(2nd LD) Samsung delivers robust Q2 results on strong chip biz, one-off gains

All News 09:30 July 30, 2020

(ATTN: ADDS more info in paras 4-5, from 9th para, 2nd photo)
By Joo Kyung-don

SEOUL, July 30 (Yonhap) -- Samsung Electronics Co. on Thursday reported strong second-quarter earnings on the back of robust chip demand and one-off gains from its display unit.

Its net profit stood at 5.55 trillion won (US$4.7 billion) in the April-June period, up 7.23 percent from a year earlier, the world's largest memory chipmaker said in a regulatory filing.

Its operating profit jumped 23.5 percent on-year to 8.15 trillion won in the second quarter of the year, but sales fell 5.6 percent on-year to 52.97 trillion won over the cited period.

Samsung's operating margin for the second quarter stood at 15.4 percent, up from 11.6 percent a year ago.

Compared to the first quarter, its operating profit soared 26.3 percent, while net profit rose 13.7 percent. Sales declined 4.3 percent

The figures were in line with the earnings guidance announced earlier this month that beat the market consensus.

Samsung Electronics Earnings

Samsung said its upbeat performance was anchored by its device solutions (DS) division as demand for server chips from data centers remained solid with the pandemic-driven, stay-at-home trend.

The second-quarter bottom line was also helped by one-time gains from its display panel (DP) business. Samsung did not disclose the exact amount of one-off profit, but industry insiders speculate it received more than $900 million from Apple Inc., which apparently failed to buy contracted volumes of Samsung Display Co.'s mobile display panels.

Revenue from the semiconductor unit stood at 18.23 trillion won in the second quarter of the year, a 13.3 percent increase from a year earlier. Its operating profit from the chip business nearly doubled to 5.43 trillion won from 3.4 trillion won a year ago.

According to DRAMeXchange, a market tracker under TrendForce, the contract price for 8-gigabit DDR4 DRAM, a benchmark price for the category, rose for five straight months, from $2.84 in January to $3.31 in May, though its gains remained almost flat in June.

"The memory business saw robust demand for cloud applications related to remote working and online education as the impact from COVID-19 continued, while demand for mobile was relatively weak," Samsung said.

Samsung said earnings for its system LSI business fell due to a drop in demand for mobile components. However, its foundry business achieved a record quarterly and half-yearly revenue as its customers' inventory buildups increased.

Samsung's display business returned to the black, thanks to one-time gains. It logged 6.72 trillion won in sales and an operating profit of 300 billion won.

Its display business suffered an operating loss of 290 billion won in the first quarter.

This file photo, taken April 7, 2020, shows the outdoor sign of Samsung Electronics Co. at its office building in Seoul. (Yonhap)

Samsung's IT & Mobile Communications (IM) division suffered a sales decline, but its performance was better than expected.

The mobile business unit posted 20.75 trillion won in sales in the second quarter, down 19.7 percent from a year earlier, but the unit's operating profit surged 25 percent on-year to 1.95 trillion won.

"Efficient cost management, including reductions of marketing expenses and offline promotions, helped deliver solid profits," the company said.

Samsung's home appliance division, comprised of visual display and digital appliance businesses, chalked up sales of 10.17 trillion won, down 8.1 percent from a year earlier, but operating profit climbed 2.8 percent on-year to 730 billion won.

"Profit for the visual display business rose despite softness in sales as the company sought new sales opportunities online to overcome difficulties sparked by global lockdowns," the company said. "Seasonal demand for air conditioners on top of cost-effective marketing strategies also helped earnings."

In the second quarter, Samsung said its capital expenditures reached 9.8 trillion won, which includes 8.6 trillion won spent on semiconductors and 0.8 trillion won on displays. Its total capital expenditure in the first half was tallied at 17.1 trillion won.

This photo, provided by Samsung Electronics Co. on May 21, 2020, shows the company's chip plant in Pyeongtaek, south of Seoul. (PHOTO NOT FOR SALE) (Yonhap)


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