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Samsung Electronics Results 
Q3 2014 
Summary and Commentary 
(Updated with Samsung’s full accounts release data) 
Note: S...
Aquilla 
Samsung Electronics 
•Samsung Electronics is the largest company within the 
Samsung Group, a “Chaebol” conglomer...
Aquilla 
Key Data Points 
Q3 ’14 (₩) Q3 ’14 ($) Q2 ’14 (₩) Q3 ’13 (₩) YoY ₩ 
Revenue 47.4 T₩ 45.2 B$ 52.4 T₩ 59.1 T₩ - 20%...
Semi-conductor Revenue 
DP Revenue 
(Display) 
CE Revenue 
(Consumer Electronics) 
Aquilla 
Source: Samsung Electronics Re...
Aquilla 
27% 
24% 
21% 
18% 
15% 
12% 
9% 
6% 
3% 
Source: Samsung Electronics Results 
Net Profit 
Net Profit Declines 
•...
Tablet Units - Peaked? Tracking the trailing 12 months (current and 3 
Tablet Units 
Tablets kU Tablets Trailing 12m kU 
A...
Aquilla 
8% 
7% 
6% 
5% 
4% 
3% 
2% 
1% 
Source: Samsung Electronics Results 
Marketing Spend (to Q2 ’14) 
Heavy Spend - D...
Samsung’s Q3 Results Analysis - Full Slide Deck 
Aquilla
Samsung’s Q3 Results Analysis 
These popular slides cover an in-depth analysis of Samsung’s Q3 results 
The slides shown a...
Aquilla 
Nick Graves, CEO • nick@aquilla-europe.com • +44 780 225 6536 
Aquilla Europe Ltd • Kennett Cottage • OX9 3QS • U...
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Samsung q3'14 commentary introduction updated

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Samsung this week released its final and full numbers for Q3, and these have been incorporated into the updated slide pack, of which a sample is attached. The major numbers have not changed significantly, but the geo data is now available, indicating the scale of the declines by region across the world, as well as the Q3 marketing spend data.

To receive the full set, which runs to some 25 slides including charts, commentary, interpretation and outlook, plus all slides in full colour:

Contact
Aquilla Europe
nick@aquilla-europe.com

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Samsung q3'14 commentary introduction updated

  1. 1. Samsung Electronics Results Q3 2014 Summary and Commentary (Updated with Samsung’s full accounts release data) Note: Samsung Q3 = Calendar Q3 Aquilla
  2. 2. Aquilla Samsung Electronics •Samsung Electronics is the largest company within the Samsung Group, a “Chaebol” conglomerate based in the town of Samsung, in South Korea. •Samsung Electronics comprises three main divisions, one of which is usually reported in two parts. These are: •Device Solutions, which includes: •The Semi-conductor Division, abbreviated to “Semi” •and the Display Panel Division, abbreviated to “DP” •Consumer Electronics Division, abbreviated to “CE” •IT & Mobile Communications Division, abbreviated to “IM”. This includes the smartphone and tablet business. •In 2013, Samsung Electronics accounted for 64% of the revenue and 92% of the Net Income of Samsung Group •This report focuses entirely on Samsung Electronics
  3. 3. Aquilla Key Data Points Q3 ’14 (₩) Q3 ’14 ($) Q2 ’14 (₩) Q3 ’13 (₩) YoY ₩ Revenue 47.4 T₩ 45.2 B$ 52.4 T₩ 59.1 T₩ - 20% Net Income 4.2 T₩ 4.0 B$ 6.3 T₩ 8.2 T₩ -49% Semi-Conductor Div Sales 9.9 T₩ 9.4 B$ 9.8 T₩ 9.7 T₩ + 2% DP Division Sales (Display) 6.3 T₩ 6.0 B$ 6.3 T₩ 8.1 T₩ - 23% CE Division Sales (CE) 11.6 T₩ 11.0 B$ 13.0 T₩ 12.0 T₩ - 4% IM Division Sales (Mobile) 24.6 T₩ 23.4 B$ 28.5 T₩ 36.6 T₩ - 33% Smartphone Sales (IDC) Units 78.1 M 74.3 M 80.4 M - 3% Tablet Sales (IDC) Units 9.9 M 8.5 M 9.7 M + 2% Note: USD Figures are as reported by Samsung Electronics Source: Samsung Electronics Results, IDC
  4. 4. Semi-conductor Revenue DP Revenue (Display) CE Revenue (Consumer Electronics) Aquilla Source: Samsung Electronics Results Revenue Mix by Division Mobile Revolution •The mobile takeover of Samsung Electronic’s business was startling: from 20% to 50% inside 4 years •However the honeymoon may be over, as the IM business saw consecutive sharp declines, most recently of 31% •The Semi-conductor business has compensated slightly, with growth of 4% •The Display business also declined sharply, perhaps suffering from OEMs switching to non-competitive suppliers •CE has remained stable for three years now as smart TVs and other product lines compensate for overall price declines Most recent Share YoY 19% 4% 12% -21% 22% -1% IM Revenue 47% -31% (Mobile) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Divisional Revenue Mix
  5. 5. Aquilla 27% 24% 21% 18% 15% 12% 9% 6% 3% Source: Samsung Electronics Results Net Profit Net Profit Declines •Net Profit declined again to $4.0B, and to 9% of revenues, disappointing (but not surprising) the market •The core reason remains under performing smartphone sales due to increasing competition, especially from China •Signs of panic appeared in rumours of multiple executive changes in the IM division •Samsung is consistently behind Apple in profitability, whose net profitability is now some 11% higher at 20% of sales •There were few currency effects, as the Korean Won strengthened a mere 2% against the USD from Q3 2013. Comparative Net Income CQ3 2014 Google Apple Microsoft 0% 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Net Profit (%) Net Profit (B$) Samsung Electronics Net Profit Net Profit B$ Net Profit %
  6. 6. Tablet Units - Peaked? Tracking the trailing 12 months (current and 3 Tablet Units Tablets kU Tablets Trailing 12m kU Aquilla previous Quarters) eliminates seasonality, and gives a better indication of the longer term trends 80,000 65,000 50,000 35,000 20,000 5,000 -10,000 Source: Gartner, IDC and others 20,000 15,000 10,000 5,000 0 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Trailing 12m Q Units Units (000s) (000s)
  7. 7. Aquilla 8% 7% 6% 5% 4% 3% 2% 1% Source: Samsung Electronics Results Marketing Spend (to Q2 ’14) Heavy Spend - Desperation? •Much of Samsung’s success in smartphones, particularly in the US and Europe, was attributed to massive spend on advertising and sales promotion. Peaking at $3.8B in Q4 2012, the spend was clearly high •Samsung almost matched this in Q2, but reduced spend sharply in Q3, to $2.7B •The company had stated in its Q2 results call that Q3 will see a much lower marketing spend - while there was a drop, it was not as large as expected •Amidst slowing revenues this still represented 6% of sales, a major commitment •Of this Sales Promotion was 70%, suggesting some desperation to keep sales moving •Samsung will also be challenged to match the powerful viral marketing success of Xiaomi in China, without the core product differentials that Apple brings Tracking the trailing 12 months (current and 3 previous Quarters) eliminates seasonality, and gives a better indication of the longer term trends 0% 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Percent of Rev T 12m Marketing (M$) Samsung Electronics Marketing Spend Advertising M$ Sales Promotion M$ Percentage of Revenue Trailing 12m
  8. 8. Samsung’s Q3 Results Analysis - Full Slide Deck Aquilla
  9. 9. Samsung’s Q3 Results Analysis These popular slides cover an in-depth analysis of Samsung’s Q3 results The slides shown are an introduction To receive the full set, including charts, commentary, interpretation and outlook plus all slides in full colour contact Aquilla Europe nick@aquilla-europe.com Aquilla
  10. 10. Aquilla Nick Graves, CEO • nick@aquilla-europe.com • +44 780 225 6536 Aquilla Europe Ltd • Kennett Cottage • OX9 3QS • UK • www.aquilla-europe.com

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