Samsung Electronics Co. Ltd. ((SSNLF)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Samsung Electronics Co. Ltd. presented a balanced sentiment, reflecting both positive and negative aspects. While the company showcased growth in its DS division and success in cost management, it also faced challenges such as an overall revenue decline and a significant drop in operating profit. This mix of outcomes resulted in a neutral sentiment, as the highlights and lowlights were evenly matched.
DS Division Revenue Growth
The DS division reported an impressive 11% sequential increase in sales, primarily driven by the demand for high-value-added memory products like HBM3E and DDR5, particularly for servers. This growth underscores Samsung’s strong position in the memory market and its ability to capitalize on technological advancements.
Cost Management Success
Samsung’s effective cost management strategies led to a reduction in SG&A expenses by KRW 0.6 trillion, bringing them down to KRW 20.8 trillion. This achievement highlights the company’s focus on maintaining operational efficiency through prudent sales and marketing cost management.
Sustainability Achievements
The DX division made significant strides in sustainability, achieving a renewable energy transition rate of 93.4%. Efforts to reduce direct carbon emissions and a 31.5% power reduction in major products compared to 2019 levels demonstrate Samsung’s commitment to environmental responsibility.
Foundry Business Expansion
Samsung’s Foundry business experienced robust growth, with full-scale volume production of 3-nanometer GAA mobile products. This expansion contributed to a notable quarter-over-quarter revenue increase, reflecting the company’s strategic investments in advanced semiconductor technologies.
Mobile Display Growth
Revenue growth in the mobile display segment was supported by the timely supply of new smartphone products to major customers. Additionally, increased sales in the IT and automotive segments further bolstered this division’s performance.
Overall Revenue Decline
Despite successes in certain areas, Samsung faced a 5.8% quarter-on-quarter decline in total revenue, amounting to KRW 74.6 trillion. This decline highlights the challenges the company faces in maintaining growth across all its divisions.
DX Division Revenue Decline
The DX division saw a 16% revenue decline compared to the previous quarter, attributed to the diminishing launch effects of new smartphone models and intensified competition in the TV and other segments.
Operating Profit Decrease
Operating profit decreased by KRW 2 trillion, settling at KRW 4.7 trillion. The operating margin contracted by 2.2 percentage points to 6.3%, reflecting the financial pressures faced by the company.
Impact of Currency Effects
The strengthening of the Korean won against the U.S. dollar adversely impacted Samsung’s operating profit by approximately KRW 0.5 trillion compared to the previous quarter, illustrating the challenges posed by currency fluctuations.
Challenges in the Memory Business
Despite revenue growth in the DS division, the memory business faced challenges, including inventory value adjustments and one-off costs related to export restrictions to China, impacting overall profitability.
Forward-Looking Guidance
Samsung’s forward-looking guidance outlines a strategic focus on AI and sustainability, with a renewable energy transition rate of 93.4% in the DX division and significant reductions in carbon emissions. The company also announced a shareholder return policy, including a quarterly dividend of KRW 367 per share and a KRW 10 trillion share repurchase program aimed at enhancing shareholder value.
In summary, Samsung Electronics’ earnings call reflected a neutral sentiment, with balanced highlights and lowlights. While the company achieved growth in its DS division and demonstrated cost management success, it also faced challenges such as revenue and operating profit declines. Looking ahead, Samsung’s strategic focus on AI, sustainability, and shareholder returns positions it for future growth and resilience in the competitive market.