SAMSUNG ELECTRONICS
Earnings Presentation:
3Q 2023 Financial Results
DISCLAIMER
The financial information in this document are consolidated earnings results based on K-IFRS.
This document is provided for the convenience of investors only before the external review on our 3Q 2023 financial results is completed. The review outcomes may cause some parts of this document to change.
This document contains "forward-looking statements" - that is statements related to future not past events.
In this context "forward-looking statements" often address our expected future business and financial performance and often contain words such as "expects" "anticipates" "intends" "plans" "believes" "seeks" or "will ". "Forward-looking statements" by their nature address matters that are to different degrees uncertain.
For us particular uncertainties which could adversely or positively affect our future results include:
- The behavior of financial markets including fluctuations in exchange rates interest rates and commodity prices
- Strategic actions including dispositions and acquisitions · Unanticipated dramatic developments in our major businesses including DX (Digital eXperience) DS (Device Solutions)
- Numerous other matters at the national and international levels which could affect our future results
These uncertainties may cause our actual results to be materially different from those expressed in this document.
INDEX
PRESENTER
RESULTS & OUTLOOK
3Q 2023 RESULTS
-
FINANCIAL DATA
APPENDICES
PERFORMANCE BY BUSINESS UNIT
Earnings Presentation
Presenter by Business Unit
Ben Suh, EVP | Jaejune Kim, EVP | Hyeokman Kwon, VP | Gibong Jeong, EVP | Casey Choi, EVP | Daniel Araujo, VP | KL Roh, VP |
Investor Relations | Memory | System LSI | Foundry | Samsung Display Corp | Mobile eXperience | Visual Display |
Device Solutions | Device eXperience |
3Q 2023 Result & Financial Data
Based on the consolidated financial statement in 3Q 2023
(Unit: KRW Trillion)
Sales
Cost of sales
Gross Profit
SG&A expenses
- R&D expenses
Operating Profit
Other non-operating income/expense
Equity method gain/loss
Finance income/expense
Profit Before Income Tax
Income tax
Net profit
Profit attributable to owners of the parent
Earnings Per Share
(KRW Won)
3Q23 | % of sales | 2Q23 | % of sales | 3Q22 |
67.40 | 100.0% | 60.01 | 100.0% | 76.78 |
46.62 | 69.2% | 41.65 | 69.4% | 48.07 |
20.79 | 30.8% | 18.36 | 30.6% | 28.71 |
18.35 | 27.2% | 17.69 | 29.5% | 17.86 |
7.01 | 10.4% | 7.20 | 12.0% | 6.27 |
2.43 | 3.6% | 0.67 | 1.1% | 10.85 |
0.04 | - | 0.03 | - | 0.03 |
0.26 | - | 0.20 | - | 0.31 |
1.21 | - | 0.81 | - | 0.66 |
3.94 | 5.8% | 1.71 | 2.9% | 11.86 |
(1.90) | - | (0.01) | - | 2.47 |
5.84 | 8.7% | 1.72 | 2.9% | 9.39 |
5.50 | 8.2% | 1.55 | 2.6% | 9.14 |
810 | 228 | 1,346 |
Key Profitability Indicators
ROE
Profitability (Net profit/sales)
Asset turnover (Sales/asset)
Leverage (Asset/equity)
EBITDA Margin
3Q22
26%
12%
3Q23 | 2Q23 | 3Q22 |
7% | 2% | 12% |
0.09 | 0.03 | 0.12 |
0.60 | 0.54 | 0.68 |
1.26 | 1.26 | 1.38 |
17% | 16% | 26% |
2Q233Q23
16%17%
2%7%
EBITDA Margin | ROE |
Performance by Business Unit
Sales | 3Q23 | 2Q23 |
(Unit: KRW Trillion) | ||
Total | 67.40 | 60.01 |
DX | 44.02 | 40.21 |
VD / DA | 13.71 | 14.39 |
VD | 7.32 | 7.25 |
MX / Networks | 30.00 | 25.55 |
MX | 29.25 | 24.61 |
DS | 16.44 | 14.73 |
3Q22 QoQ YoY
76.78 12%↑ 12%↓
47.26 9%↑ 7%↓
- 5%↓ 7%↓
- 1%↑ 7%↓
- 17%↑ 7%↓
- 19%↑ 5%↓
23.02 12%↑ 29%↓
Operating Profit
(Unit: KRW Trillion)
Total
DX
VD / DA
MX / Networks
DS
SDC
Harman
3Q23 | 2Q23 |
2.43 | 0.67 |
3.73 | 3.83 |
0.38 | 0.74 |
3.30 | 3.04 |
(3.75) | (4.36) |
1.94 | 0.84 |
0.45 | 0.25 |
3Q22 QoQ YoY
10.85 | 1.77 | (8.42) | ||
3.53 | (0.10) | 0.20 | ||
0.25 | (0.36) | 0.13 | ||
3.24 | 0.26 | 0.06 | ||
5.12 | 0.61 | (8.87) | ||
1.98 | 1.09 | (0.04) | ||
0.31 | 0.20 | 0.14 | ||
Memory | 10.53 | 8.97 | ||
SDC | 8.22 | 6.48 | ||
Harman | 3.80 | 3.50 |
15.23 17%↑ 31%↓
9.39 27%↑ 13%↓
3.63 9%↑ 5%↑
- Sales and operating profit of each business stated above reflect the organizational structure as of 2021 and the sales of business units include intersegment sales.
- The DX Division provides earnings call materials based on the business structure before the reorganization to prevent confusion and to improve understanding among investors.
- DX: Device eXperience MX: Mobile eXperience DS: Device Solutions
- Harman's sales and operating profit figures are based on Samsung Electronics' fiscal year and acquisition related expenses are reflected.
Memory
3Q23 Results
Memory The demand environment improved, despite relatively weak demand for conventional servers, thanks to rising adoption of high-density products for PC/mobile, the imminent completion of customer inventory adjustments, and ongoing strength for high-endAI-oriented products.
We received numerous purchase inquiries amid widening awareness of the industry reaching a bottom, following the industry-wide production cuts.
Under a continued operational focus on profitability, we continued to expand sales of advanced-node products such as HBM/DDR5, and UFS4.0. For legacy products, which have relatively high inventory levels, we targeted reducing inventory by lowering production.
4Q23 Outlook
Memory Memory demand is likely to improve thanks to year-end promotions and launches of new products by our major customers, while the high- density trend in major applications is forecast to accelerate and demand for generative AI should remain strong.
We plan to increase the sales portion of highly profitable product lines-including automotive- while working to expand mass production and sales of HBM3 in earnest.
We will proactively address the rising demand for new interface products, such as DDR5, PCle, Gen5, and UFS4.0 via ramp-ups at the new fab.
2024 Outlook
Memory For PC and mobile, arrivals of some replacement cycles and continued growth in the high-density trend should boost demand; with the spread of on-device AI likely to provide additional momentum.
In server, demand is forecast to recover gradually, driven by increased demand for AI and normalizing inventory levels at customers.
However, we need to keep monitoring variables that affect server demand, such as changes in IT investments based on macro conditions, AI-orientated investments, and geopolitical issues.
We will expand sales of advanced-node products, such as 1b-based DDR5/LPDDR5x and V8-based UFS 4.0; and we will actively address demand for generative AI by increasing our HBM3 and HBM3E portion of sales on the back of the largest production capacity in the industry.
S.LSI/Foundry
3Q23 Results | 4Q23 Outlook |
2024 Outlook
S.LSI
Foundry
Demand for mid- & low-priced smartphones remained sluggish due to influences of the economic downturn and inflation, while performance improvements were slower than expected due to a delay in the recovery of semiconductor demand alongside effects of inventory adjustments.
We have completed the development of E2400, which has significantly improved CPU, GPU, and NPU performances, and we have expanded the business area of 200 megapixel sensors from wide to tele applications.
In the third quarter, earnings remained sluggish due to stagnant line utilization due to a delayed recovery market conditions for major applications such as Mobile.
However, orders from new customers increased thanks to our enhanced competitiveness in process technology for both advanced and mature nodes. Moreover, new backlog from design wins- centering on HPC-reached a new quarterly high, thus strengthening our foundation for growth.
S.LSI
Foundry
With customer inventory adjustments seeming to be in their final stage, we expect demand to start showing a recovery due to base effects. We also expect our performance to improve significantly thanks to increased supply of parts for our major mobile customers' new products.
For mobile SoC, we are in the final developmental stages to respond to next year's flagship smartphones, and we also plan to expand our portfolio via targeting global customers for our modem business; and to enhance our solution capabilities for on-device AI.
Although the magnitude of a recovery in market condition remains uncertain, we expect to record improved earnings in 4Q as inventories approach sound levels and on increased demand driven by launch effects of new products by major customers
Regarding the GAA process, 2nd generation 3- nano GAA yields continue to improve; and for the 2-nano process, we are going to establish design infrastructure that incorporates Si results.
S.LSI Expecting the mobile market to increase centering on premium products, we will seek qualitative growth by increasing our sales portion of flagship products. Meanwhile, we remain committed to ensuring a solid business structure by expanding our business area beyond the mobile market.
Foundry The market is forecast to shift to growth thanks to a rebound in mobile demand and continued growth in HPC demand.
We will strengthen our technology competitiveness through the 2H mass production of the 2nd generation 3-nano process as well as the 4th generation 4-nano process for HPC. For mature processes, we will strive to expand within applications such as HPC, automotives, consumer goods, etc., by developing specialized process technologies, including RF and eMRAM.
SDC
3Q23 Results
Mobile Market demand increased slightly Q-Q thanks to seasonal demand and launches of new products by major smartphone makers. We achieved solid results by focusing on premium OLED products, with the polarizing trend intensifying between high-end and mid-range-and-below markets.
Large Amid muted demand, we strengthened operational fundamentals by enhancing yields and reducing losses. At the same time, we improved our bottom line Q-Q by focusing on high-end products such as gaming monitors.
4Q23 Outlook
Mobile Sales should stay relatively strong thanks to seasonal effects in the smartphone and IT markets, but at the same time, lingering inflation and high interest rates may weigh on consumer sentiment.
We will strive to generate similar results Q-Q by leveraging our competitiveness in the high-end market, which is showing relatively strong demand and will feature launches of new foldable products.
Large Despite concerns over prolonged tepid demand due to the economic downturn, we will remain committed to offsetting losses by improving our product mix via an increased share of QD-OLED for monitors.
2024 Outlook
We will strive to achieve similar earnings Y-Y by utilizing our unrivaled capabilities, which include preemptive investments, development of differentiated technologies, and our outstanding product quality and yield.
As our strategic customers are releasing products featuring OLED in earnest in the foldable smartphone, IT OLED, Automotive, and Gaming segments, we will actively promote OLED's unique selling points and create a turning point in the market.
In particular, we will maintain our leadership by developing not only technology that caters to customer needs, but also a complete supply chain-both upstream and downstream-in the high-potential AR/VR markets.
MX/Network
3Q23 Results | 4Q23 Outlook | 2024 Outlook |
MX
Global smartphone demand rebounded and the overall market demand grew Q-Q.
Revenue and operating profit grew thanks to the successful launch of new flagship models and new foldables/tablets showed strong sales on the back of smooth supply.
S23 series maintained solid sales momentum, and our overall sales and ASP increased mainly thanks to the higher flagship portion in major product lineups.
We achieved solid double-digit profitability with enhanced resource allocation.
MX
The smartphone market is expected to grow q-q due to seasonality. Competition in the mass market segment is likely to intensify while uncertainties caused by geopolitical risks are likely to remain.
We will continue with solid sales of foldables and S23 series via various sales promotions in the year-end holiday season.
Expand sales of tablets and wearables, focusing on new premium lineups by leveraging seasonality and strengthening co-marketing campaigns with customers.
Amid intensifying competition in the smartphone market, we will seek to increase y-y revenue and profits focusing on up-selling efforts and flagship- oriented sales.
MX | We expect the smartphone market to grow, centering on the |
flagship segment, as consumer sentiment stabilizes in | |
anticipation of a soft landing of the global economy. Tablet | |
demand is forecast to rise, focusing on premium devices, and | |
TWS demand should grow slightly amid a growing mass | |
market. | |
MX aims to grow annual flagship shipments by double digits | |
and achieve smartphone revenue growth exceeding the | |
market growth. For tablets, it will focus on strengthening the | |
premium product line-up to meet demand for large screens. | |
For wearables, we will increase wellness features and | |
establish a full line-up. | |
We will provide our customers with hyper-personalized | |
experiences by applying generative AI technologies and | |
secure core technologies for future growth areas such as XR, | |
digital Health, and Digital Wallet. At the same time, we will | |
strive to secure stronger profitability by enhancing resource | |
allocation. |
Networks Revenue decreased in overseas markets as mobile | Networks The Networks business will seek to obtain | |
carriers scaled back their investments. | additional wins in overseas markets. | |
Networks Seek to grow revenue through timely responses to major overseas businesses while also winning orders for new businesses and reinforce its technology leadership in core 5G chips and vRAN.
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Disclaimer
Samsung Electronics Co. Ltd. published this content on 31 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2023 00:22:09 UTC.