Samsung announced Q2’08 results on July 24, 2008. Of particular interest was the LCD division.
- Revenues: Up 9% Q/Q and 41% Y/Y to KRW4.71 trillion
- Consolidated Net Sales: Up 8% Q/Q and 30% Y/Y to KRW3.94 trillion
- Operating Profit: Down 1% Q/Q and up 244% Y/Y to KRW1.00 trillion
- Consolidated OP: Down 3% Q/Q and up 239% Y/Y to KRW1.05 trillion
- Large-Area Shipment: Up 11% Q/Q and 32% Y/Y to 25.4 million units
- Small/Medium Shipment: Up 13% Q/Q to 25.3 million units
Analysis after the jump.
Revenues and unit shipments increased in Q2’08, but profits were down. This is not a good sign. Consolidated operating profits declined 3% Q/Q to KRW1.05 trillion in Q2’08. The main reason for decreasing profits were due to declining LCD panel prices due to an oversupply situation. Panel production continued unabated as seen in Samsung’s Q2’08 numbers but demand for LCD products did not materialized as much as expected. According to Samsung, LCD demand for notebook PCs were strong and so were LCD TVs. This is in fact only partially true. LCD TV demand is robust, but it is transitioning to smaller more affordable units. This is a trend that is not favorable to any LCD manufacturer who has invested billions in next generation G7 and larger TFT LCD fabrication plants.
Samsung’s Q3’07 business outlook was optimistic with shipment increases due to back-to-school demand, which should kick in around August. Again, demand will most likely come from notebook PCs. With new model introductions thanks to Intel’s improved Centrino 2 platform, there should be healthy demand. Perfect timing. Samsung also expects there to be an increase in LCD TV sales due to seasonality. Samsung might be right, but prices will need to decrease, especially for larger sizes for consumers to purchase them. The main reason for this is that consumers do not have the same level of disposable income as they did last year. Access to credit is also hampered due to the collapse in housing values as well as credit issuers being significantly more cautious. Unfortunately, Samsung has the wrong strategy in mind as it is focusing on 46″ and larger LCD TVs with premium features such as Full HD (1080p, 1920 x 1080) and 120Hz double-frequency. These 46″ and larger LCD TV panels will be manufactured from its G8-1 line.
Source: Samsung (PDF)
[tags]Samsung, Samsung LCD, Samsung LCD Q2’08, LCD TV, Notebook PC, 46″, G8, Full HD, 1080p, 1920 x 1080, 120Hz[/tags]