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2017 1Q Earnings Release2017-04-26
Samsung Electro-Mechanics recorded KRW 1,570.5 billion in sales and KRW 25.5 billion in operating profit.
- The sales increased by 17% compare to previous quarter (4Q 2016), and the company went into the black.
- New models are released by strategic customers, and sales to Chinese customers has expanded.
Samsung Electro-Mechanics plans to supply more dual cameras and MLCCs to China in order to push its Chinese sales to as high as 30% of the total sales.
The company also pursues its next-generation semiconductor package and industrial/electronic part businesses in earnest.
Samsung Electro-Mechanics announced on the 26th that the company recorded KRW 1,570.5 billion in sales and KRW 25.5 billion in operating profit, citing its consolidated financial statements. The sales increased by 17% QoQ, and the company went into the black in operating profit.
Samsung Electro-Mechanics also announced that the release of new models by its strategic customers has boosted the sales of its main products, such as camera modules and Multi-Layer Ceramic Capacitors (MLCCs). In addition, it reported a significant increase in the sales of dual cameras and other high-end products to its Chinese customers.
Samsung Electro-Mechanics expects that the full impact from the release of new smartphone models will arrive in 2Q. Accordingly, the company plans to expand its workforce to ensure the just-in-time supply of its products so that they can reinforce the market power of its flagship products. In addition, the company will increase the supply of high value-added products, such as dual cameras and MLCCs, to Chinese customers and will push the percentage of its Chinese sales to as high as 30% of its total sales.
On the other hand, Samsung Electro-Mechanics will push forward with the next-generation panel level package (PLP) business and the auto part business, which are the two new growth engines of the company. The company constructed the PLP lines in Cheonan. Starting with the mass production of small outline ICs in 2H, the company will expand on the product groups to include memories and APs. As for the auto part business, the company’s plan is to more than double its sales by expanding the sales of camera modules and high-reliability MLCCs to European and North American customers.
The company, in particular, plans to lay the groundwork for expanding its electronic part business by engaging in long-/medium-term collaboration with Harman, the world’s largest electronic part manufacturer, for solution products, software, and systems.
※ Performances and Strategies by Sectors
[Digital Module] Samsung Electro-Mechanics’s sales in this sector increased by 33% to KRW 773 billion. The main contributing factor was the release of new models by strategic customers and the increased sales of dual and high-pixel camera modules. The sale of dual camera modules, in particular, more than quadrupled from the previous quarter. Samsung Electro-Mechanics began to supply the products to Chinese customers in 2H 2016.
The company will begin the supply of image synthesis dual camera modules in 2Q, when the Chinese customers are slated to launch their flagship models, while expanding and fully operating the production lines at overseas sites in response to the growth of the dual camera market.
[Chip Parts] The sales of high added-value MLCCs to strategic customers increased along with the sales of auto and industrial parts, thereby boosting the company’s sales in this sector by 10% to KRW 490.4 billion. The company plans to expand its MLCC product lines to include ultrahigh-capacity/ultra-small high value-added MLCCs for the IT industry, as well as industrial and electronic products. It will actively respond to the increased demand for high value-added MLCCs by fully operating its new plants overseas and improving its productivity.
[Board] The company’s sales in this sector was driven down to KRW 292.5 billion by the decreased demand for PCs in the market, which represents a 2% decrease from the previous quarter. With the supply of rigid flexible PCBs (RFPCBs) for next-generation OLED expected to begin in earnest by the end of 2Q, Samsung Electro-Mechanics plans to secure its position as the main supplier of the products based on its superior production rate over competitors. The company also seeks to improve its profits by restructuring its businesses around high value-added products such as next-generation high-density interconnection (HDI) boards applied with the package technology and FPCBs.
※ Quarterly Management Performance
(unit: KRW billion)