Samsung Electronics results in line after massive US fine
SEOUL (AFP) - Samsung Electronics, the world's largest memory-chip maker, has reported solid third quarter results even as it makes provisions to pay a massive fine in the United States to settle price-fixing charges.
The company, market leader in dynamic random access memory (DRAM) chips and manufacturer of a host of high-tech products from mobile phones to flat screen panels, said its operating profit in the three months to September rose 28.8 percent to 2.1 trillion won (2.0 billion dollars) from the June quarter.
Compared with a year earlier, however, operating profit was down 22.5 percent but the results largely met market expectations and Samsung Electronics shares were little changed at 563,000 won in the morning trade.
Net profit stood at 1.9 trillion won, up 11.2 percent from the previous quarter but down 29.9 percent from a year earlier as sales rose 7.0 percent to 14.5 trillion won, up 1.4 percent from 2004.
"Solid sales of semiconductors, LCDs and mobile phones were key factors that helped Samsung register strong revenue in spite of the difficult business climate caused by rising global oil prices," the company said.
Provisions set aside to cover unexpected costs related to the US government investigation into the price-fixing of memory chips dented third quarter net profits, it said in a statement.
Samsung Electronics and its US subsidiary, Samsung Semiconductor Inc. have agreed to plead guilty and pay a 300-million-dollar fine for participating in an international conspiracy to fix prices, the US Department of Justice said Thursday.
Samsung's fine is the second-largest criminal antitrust fine in US history and the largest criminal fine since 1999, the department said.
"Despite the challenging business environment and depressed market conditions, sales of our mainstay products remained robust, demonstrating the inherent strength and competitiveness of Samsung's business model," said Chu Woosik, senior vice president of Samsung's investor relations team.
"Samsung Electronics anticipates positive fourth-quarter results as demand for IT products tends to surge in the year-end," he said.
Analysts largely agreed that the third quarter performance was a solid performance, meeting market expectations.
"The overall third-quarter results turned out to be good enough," Daewoo Securities analyst Chung Chang-Won said.
The Liquid Crystal Display (LCD) business especially came in stronger than expected, clearing any market jitters over the sector, backed by a sharp drop in production costs, he noted.
All other sectors performed well in line with market expectations although the semiconductor division saw lower operating profit margins than its local rival Hynix.
"Chips and LCD panels will likely continue their earnings momentum, pushing fourth quarter operating profit to 2.3-2.4 trillion won," he said.
Woori Investment Securities analyst Koo Hee-Jin said the fourth quarter results would be better than the third quarter's as the company, unlike last year, will not hand out generous year-end bonuses to its employees.
"Samsung's results corroborate the belief that the IT sector will see a recovery in coming months and the improvement in Samsung's performance will continue in the fourth quarter," he said.
Market Data 
Markets 
AI
