Samsung had record sales in 2021, underwhelming profit

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Samsung had record sales in 2021, underwhelming profit

A person walks by a Samsung Electronics' retail shop in Seoul. [YONHAP]

A person walks by a Samsung Electronics' retail shop in Seoul. [YONHAP]

 
Samsung Electronics reported lower-than-expected profit for last year as spending on advanced chip manufacturing eroded profitability despite record revenues.  
 
The electronics maker said Thursday that its net profit jumped 51.1 percent to 39.9 trillion won ($33.2 billion) last year compared to the previous period, dipping below a market consensus of 44.8 trillion won by market tracker FnGuide. 
 
Operating profit rose 43.5 percent to 51. 6 trillion won, missing a market consensus of 58.3 trillion won.
Still, the figure was the highest in four years.  
 
Sales hit an all-time high of 279.6 trillion won in 2021, up 18 percent from a year earlier.  
 
Semiconductors led the growth and accounted for over half the entire profit as a wide range of chips -- including dynamic random access memory (DRAM), NAND Flash memory, microprocessors and contract chip-making -- all enjoyed robust demand.  
 
The chip business brought in 29.2 trillion won in operating profit, up 55.3 percent on year.  
 
That cash cow business, however, is where the company spent the most as well. It invested a total of 43.6 trillion won into expanding capacity and upgrading its chip plants. Its total capital expenditure was 48.2 trillion won last year.  
 
The company warned of uncertainties ahead for the chip business.
“Looking to the first quarter, while risks, such as the spread of a Covid variant, need to be monitored, the Memory Business will concentrate on enhancing the balance of its portfolio, including through increased sales of cutting-edge, high-value products to support server/PC demand and also by actively addressing demand from all applications,” Samsung Electronics said in a statement.  
 
Memory chip prices are expected to go down in coming quarters after peaking in the third quarter of last year.  
The strong 2021 performance is also attributed to solid performance by Galaxy smartphones, driven by surging demand for foldable models.  
 
Its Mobile eXperience (MX) Business, which covers smartphones and network equipment, generated 13.7 trillion won in operating profit, up 19.1 percent over a year earlier.  
 
The electronics maker said that sales of its latest folding phones – the Galaxy Z Fold 3 and Galaxy Z Flip 3 – quadrupled last year compared to their predecessors, without mentioning the number of units sold.  
 
Market analysts project that Samsung sold over 100 million units of Galaxy Fold 3 and Flip 3s.  
 
It is hoping that the momentum will continue with the planned launch of the Galaxy S22 phones next month despite unfavorable market conditions.  
“Looking ahead to the first quarter, demand for smartphones and tablets is forecast to decline quarter-on-quarter amid weak seasonality as well as uncertainties over component supply,” the manufacturer said in a statement. 
“However, the MX Business aims to secure solid profitability by expanding flagship sales such as Galaxy S21 FE and the upcoming release of a new Galaxy S series,” it said.  
 
The consumer electronics division registered 3.65 trillion won in operating profit throughout the year, up 3.5 percent.  
Operating profit for the display business increased by 99 percent to 4.5 trillion won. Sales of organic light-emitting diode (OLED) panels for mobile devices drove growth while liquid crystal displays (LCD) for televisions generated losses.   
 
For the fourth quarter of last year, the electronics company reported 13.9 trillion won in operating profit, up 53.3 percent on year. Sales came to 76.57 trillion won in the final quarter, up 24.4 percent over a year earlier.  

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]
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