Samsung Electronics' fourth-quarter net profit of $8.97 billion increased 64% year-on-year

Tencent Technology News On January 27, Samsung Electronics released the company's fourth quarter and full-year financial report for 2021 on Thursday. According to the financial report, Samsung Electronics' fourth-quarter net profit was 10.8 trillion won (about $8.97 billion), up 64% year-on-year; operating profit was 13.8 trillion won (about $11.46 billion), up 53% year-on-year; and revenue was 76.5 trillion won (about $63.5 billion), up 24.4% year-on-year.

Fourth Quarter Results Analysis:

Samsung Electronics' fourth-quarter revenue reached 76.5 trillion won ($63.5 billion), up 24.4 percent from 61.5 trillion won in the year-ago quarter and up 3.5 percent sequentially, the fourth consecutive quarter of a record high. Samsung Electronics' fourth-quarter revenue growth was primarily driven by finished products, which expanded sales of high-end smartphones, including foldable mobile phones, and TVs and home appliances.

Samsung Electronics' fourth-quarter gross profit was KRW 31.6 trillion ($26.2 billion), up 39.0% from KRW 23.75 trillion in the year-ago quarter, and operating profit was KRW 13.9 trillion (US$11.46 billion), up 53.3% year-on-year or 12.3% from KRW 9.05 trillion in the year-ago quarter. The strength of the U.S. dollar against the South Korean won had a positive impact on Samsung Electronics' operating profit in the fourth quarter of about 300 billion won. In addition, operating profit decreased from the previous quarter due to special bonuses paid to employees, but operating profit increased from the same period last year, driven by the semiconductor business.

Samsung Electronics' general and administrative expenses for the fourth quarter were 17.75 trillion won ($14.7 billion), compared to 14.70 trillion won in the same period last year, and R&D expenses were 6.47 trillion won (about $5.37 billion), compared to 5.22 trillion won in the same period last year.

Samsung Electronics' fourth-quarter net profit reached 10.8 trillion won (about $8.97 billion), up 64% year-on-year, but less than the market's expectation of 11.1 trillion won, and Samsung Electronics' fourth-quarter net profit fell short of market expectations, mainly because the company issued a special bonus to employees at the end of last year and increased spending on advanced production technologies for chips and displays; the EBITDA rate was 30%, compared with 26% in the same period last year.

By business segmentation, revenue from Samsung Electronics' consumer electronics business was KRW 15.35 trillion (US$12.75 billion), up 13% from KRW 13.61 trillion in the year-ago quarter and up 9% from KRW 14.10 trillion in the previous quarter, and operating profit was 0.70 trillion won (US$580 million), compared to 0.82 trillion won in the same period last year and KRW 0.76 trillion in the previous quarter.

Revenue in the mobile division, including the mobile phone business, was KRW 28.95 trillion ($24 billion), up 30 percent from KRW 22.34 trillion in the year-ago quarter and up 2 percent from KRW 28.42 trillion in the previous quarter, and operating profit was KRW 2.26 trillion ($1.88 billion), compared to KRW 2.42 trillion in the year-ago quarter and KRW 3.36 trillion in the previous quarter.

The Device Solutions division, which includes the chip business, had revenue of KRW 34.72 trillion ($28.8 billion), up 24% from KRW 27.92 trillion in the year-ago quarter and down 1% from KRW 35.09 trillion in the previous quarter, and operating profit was KRW 10.17 trillion (US$8.45 billion), compared to KRW 5.63 trillion in the year-ago quarter and KRW 11.58 trillion in the previous quarter.

Harman's revenue was KRW 2.85 trillion ($2.34 billion), down 2% from KRW 2.92 trillion in the year-ago quarter and up 19% from KRW 2.40 trillion in the previous quarter; operating profit was 0.22 trillion won (US$182 million), compared to 0.18 trillion won in the year-ago quarter and 0.15 trillion won in the previous quarter.

2021 Results Analysis:

Samsung Electronics' 2021 revenue was KRW 279.6 trillion (US$232.2 billion), up 18.1% from KRW 236.8 trillion in the year-ago quarter.

Samsung Electronics' gross profit for 2021 was KRW 113.19 trillion (US$94 billion), compared to KRW 92.32 trillion in the same period last year, and operating profit was KRW 51.6 trillion (US$42.9 billion), compared to KRW 35.99 trillion in the same period last year.

Samsung Electronics' general and administrative expenses for general and administrative expenses in 2021 were 61.56 trillion won (about 51.1 billion US dollars), compared with 56.32 trillion won in the same period last year, and R&D expenditure was 22.40 trillion won (about 18.6 billion US dollars), compared with 21.11 trillion won in the same period last year.

Samsung Electronics' net profit in 2021 reached 39.9 trillion won (about $33.1 billion), up 51% from 26.41 trillion won in the same period last year; the EBITDA rate was 30%, compared with 27% in the same period last year.

Operations of each business unit:

Profit from Samsung's electronic storage business was down from the previous quarter due to a decline in product prices to a certain extent, resulting in lower growth than the company's guidance. The chip foundry business reported a new quarterly revenue record, but profitability was slightly lower than in the previous quarter due to higher costs associated with upgrading advanced process nodes.

In the display panel business, the profitability of mobile panels continued to improve, while the loss of large panels widened due to the decline in liquid crystal display prices and the costs associated with QD displays.

Revenue from Samsung's Mobile eXperience business unit increased slightly, primarily due to sales of high-end products such as foldable phones and device ecosystem products, while profit declined sequentially as marketing expenses increased. The performance of the network business improved compared to the previous quarter as revenue from the domestic and global businesses in Korea grew.

Samsung Electronics' consumer electronics business recorded fourth-quarter revenue due to strong sales of premium products, but profit declined slightly sequentially due to rising costs.

Fearing price volatility, rising inventories and cyclical recessions, shares of Samsung Electronics and memory chip rival SK Hynix have continued to fall since the second half of last year. However, the price decline proved to be milder than expected, as the use of chips expanded across all walks of life, and memory manufacturers took preemptive measures to stabilize supply and prevent price shocks. Samsung Guts' foundry business — which makes chips for customers who don't have their own semiconductor factories — also helps stabilize revenue.

Samsung Electronics is optimistic about continued demand for chips this year and is investing in accelerating development and expanding production of its latest technology. Both the memory and foundry departments will need more ASML lithography machines. (Compiled by Tencent Technology/No Taboo)