Samsung Elec's IM division continues stable performance in 2Q Strong SCM capabilities have positive impact on earnings

Translated by Kim So-in 공개 2021-08-02 07:55:54

이 기사는 2021년 08월 02일 07:51 더벨 유료페이지에 표출된 기사입니다.

South Korean tech giant Samsung Electronics’ IT & Mobile Communications (IM) division showed a stable performance in the second quarter thanks to its efforts to boost efficiency in its supply chain management (SCM).

The IM division posted an operating profit margin of 14.29% in the April to June quarter, continuing the momentum after recording 15% in the previous quarter, which was the best since Koh Dong-jin, head of the IM division, took office.

The division saw worse financial performance in the second quarter compared to the previous quarter due to diminishing new product effects for the flagship model. It recorded an operating profit of 3.24 trillion won ($2.82 billion) and revenue of 22.67 trillion won during the three months. Its revenue decreased by 22% quarter-on-quarter, with its operating profit down by 26%.

But the division managed to achieve the double-digit operating profit margin amid the recent deterioration in the mobile business. There was a global chip shortage in the second quarter, with the tech giant’s smartphone sales decreasing quarter-on-quarter after a production disruption in India and Vietnam due to the Covid-19.

The company’s excellent global SCM capabilities had a positive impact on the financial performance. It tried to minimize the impact of market headwinds including the Covid-19 pandemic through adjusting supplies efficiently by product and region. It also expanded its marketing campaigns from offline to online.

The dollar, euro, and major emerging market currencies slightly rose against the Korean won, which increased an operating profit of 200 billion won across the company’s businesses including parts.

Samsung said its handset sales decreased in the second quarter, influenced by a component supply shortage in the industry as well as production disruptions due to the pandemic. But it maintained solid profitability by utilizing SCM capabilities, improving cost structure, resource efficiency, marketing efficiency, and continued earnings from tablets and wearable products.

IM division head Koh has put utmost efforts into securing SCM capabilities. He has emphasized cost reduction and efficiency of the distribution process.

Koh successfully improved the division’s operating profit margin by efficiently spending marketing expenses. The division recorded an operating profit margin of 8.34% and 6.04% in the first two quarters of 2019, but the figures rose to 10~10.1% in the third and fourth quarters.

Samsung expects supply problems for components to be solved in the second half, with its Vietnam factory normalizing its operation within this month.

The company expected better performance in the second half with the launch of new foldable smartphones and the expansion of mass-market 5G devices. (Reporting by Hyun-ji Sohn)
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