Samsung Electronics says 2nd-quarter net profit surges 83 percent to record high

Samsung says 2Q net profit surges 83 percent

SEOUL, South Korea — Samsung’s net profit surged 83 percent in the second quarter to a record high amid strength in semiconductors, flat panels and TVs, though the electronics giant cautioned such stellar results may be unsustainable amid intensifying competition in areas such as mobile phones.

Samsung earned 4.28 trillion won ($3.61 billion) in the three months ended June 30, it said in a regulatory filing. Net profit a year earlier was 2.33 trillion won.

The result bested Samsung’s previous all-time high net profit of 3.99 trillion won set in the first quarter of this year. The company also reported record operating profit of 5.01 trillion won.

The Suwon, South Korea-based company’s earnings were driven by surging profitability in its semiconductor and LCD businesses, though it reported operating profit declines in digital media — which includes televisions and digital home appliances — and telecommunications, which includes mobile phones.

Samsung Electronics Co. is the world’s largest manufacturer of computer memory chips, flat screen televisions and liquid crystal displays. It ranks No. 2 in mobile phones. It produces both consumer electronics devices such as flat screen televisions and mobile phones as well as key components.

The company said total second-quarter sales totaled 37.89 trillion won, 17 percent higher than 32.51 trillion won last year.

“In the second quarter, our component businesses performed very strongly, yet it was a more challenging quarter for our set businesses,” Robert Yi, head of investor relations, said in a release. Set businesses refer to products such as televisions, appliances and phones.

Continuing strong demand combined with supply constraints for computer memory chips helped boost prices, Samsung said in separate explanatory materials for investors. Demand for flash memory chips, meanwhile, was driven by new applications such as for smart phones and tablet computers.

For LCDs, the company cited strong demand for flat screen televisions due to football’s World Cup, which was held from June 11 to July 11 in South Africa .

In its telecommunications business, mobile phone shipments increased 22 percent to 63.8 million units in the second quarter, characterized by strong sales in the United States and emerging markets, Samsung said. But it said that average selling prices declined due to “intensified price competition.” That along with a fall in the euro, reduced profitability.

Samsung said that flat screen TV shipments increased 43 percent from the same period last year to just over 9 million units amid rising demand in both developed and developing markets. Profitability declined in digital appliances, however, due to higher raw material and shipping costs, the company said.

Yi, the investor relations official, warned that Samsung may have trouble maintaining the kinds of profits it enjoyed in the second quarter.

“With intensified competition throughout the digital media and mobile industries going forward, it may become a challenge to maintain current profitability levels,” he said in the press release.

Shares in Samsung, which released earnings about 25 minutes after the start of trading, fell 1.6 percent to 814,000 won by early afternoon. The stock price surged 77 percent in 2009.