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2018 2Q Earnings Release

2018-07-25
2018 2Q Earnings Release

KRW 1.809 trillion in revenue, KRW 206.8 billion in operating profit
- 6% increase in revenue compared to same quarter last year ('17.2Q), 193% increase in operating profit
- Operating profit highest since 2013 Q2 due to increased MLCC sales (*Revnue:KRW 2.3846 trillion, Operating profit:KRW 222.4 billion)
- Revenue has decreased 10% compared to last quarter ('18.1Q), while operating profit increased by 34%
- Due to slowing demand for new smartphone models, module and substrate revenues have decreased

Growth set to continue in the second half due to expansion of high-value component sales
- Component supply increased due to new flagship model releases by strategic customers
- Strengthened ability to respond to MLCC demand through maximized production efficiency

Samsung Electro-Mechanics announced on the 25th that it recorded revenues of KRW 1.809 trillion and an operating profit of KRW 206.8 billion for Q2 on a consolidated basis. Revenuesfell by KRW 209 billion (10%) from the previous quarter, but increased by KRW 99.9 billion (6%) as compared to same quarter last year. Operating profit increased by KRW 52.8 billion (34%) compared to the previous quarter, and increased by KRW 136.1 billion (193%) as compared to same quarter last year.


Samsung Electro-Mechanics explained that operating profit has increased by a significant margin thanks to an increase in sales of high-value MLCC (Multi-Layer Ceramic Capacitor), despite the fact that module and substrate shipments have decreased due to slowing demand for the new flagship models of strategic customers.


For the second half of the year, shipments of high-value components including dual cameras, chip components, RFPCB (Rigid Flex Printed Circuit Board), etc., are anticipated to increase due to the release of new models by strategic customers. MLCC demand is expected to grow continuously as smartphone capabilities advance and automobiles become more electronics-intensive. Samsung Electro-Mechanics plans to continue this growth in performance in Q3 by improving manufacturing competitiveness and establishing a production system capable of responding in a timely fashion to the release of new models by our customers.


※ Q2 Business Results by Business Unit and Forecasts

Module Solution business unit revenues were KRW 611.9 billion, which represents a 32% increase as compared to the previous quarter and a 27% decrease as compared to same quarter last year. This is a result of a decrease in the sales of camera and communications modules due to slowing demand for the flagship models of strategic customers.
In the second half, the use of advanced components is expected to grow due to intensifying hardware competition between smartphone manufacturers. Samsung Electro-Mechanics plans to improve its competitiveness through the development of new products such as higher pixel count cameras, triple cameras, 5G-related communications modules, etc.


Component Solution business unit recorded revenues of KRW 868.6 billion, which represents an increase of 15% as compared to the previous quarter and a 60% increase as compared to the same quarter last year thanks to growing sales of IT-use high-capacity MLCC and industrial/automotive electronics-use MLCC. The MLCC market is expected to see a continuous increase in demand in the second half of the year, led by the demand for high-end products for IT-use and automotive electronics-useproducts. Samsung Electro-Mechanics plans to respond actively to MLCC market demands by maximizing production efficiency.


Substrate Solution business unit revenues stood at KRW 299.5 billion, representing a 16% decrease as compared to the previous quarter and a 6% decrease as compared to the same quarter last year. Due to decreased demand for components from strategic customers, revenues from smartphone main substrates (HDI) and RFPCB have decreased.
In the second half of the year, shipments of high-value SLP(Substrate Like PCB) and OLED RFPCB are anticipated to grow, and as for package substrates, the company plans to enter new markets such as AI, automotive electronics, and 5G.



※ Quarterly Business Performance

[Unit: KRW 100 million]

Category 2018 QoQ 2017 YoY
2Q 1Q 2Q
Revenue 18,098 20,188 △10% 17,099 6%
Operating Profit 2,068 1,540 34% 707 193%
Earnings Before Tax 1,817 1,523 19% 640 184%
Net Profit 1,220 1,112 10% 333 266%

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