Samsung Electronics issued initial Q4 2014 results in January, and then final audited accounts in March 2015. These slides are updated to reflect the audited version.
A subset of the slides is uploaded: to obtain the full pack, also in full colour, drop a mail to nick@aquilla-europe.com
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Samsung Q4 Results Analysis
1. Aquilla
Samsung Electronics Results
Q4 2014
Summary and Commentary
(Based on Samsung’s audited accounts released 13th March 2015, in KRW and USD)
Note: Samsung Q4 = Calendar Q4
The following slides are in USD, as reported by Samsung, or where not reported
converted from KRW at the same effective rate reported for KRW vs USD Revenues
This provides the most relevant comparisons with global technology companies.
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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
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Source: Samsung Electronics Results
Net Profit
Apple$18B
Net Profit Declines
•Net Profit crashed 39%
from its peak in the year
ago quarter, to $4.9B,
and to 10% of
revenues, down from
12.5%
•Samsung is structurally
behind Apple in
margins, whose net
profitability was 14%
higher at 24% of sales
•Samsung’s profitability
has also now fallen
behind both Google
and Microsoft
Comparative
Net Income
CQ4 2014
Google
Microsoft
0%
3%
6%
9%
12%
15%
18%
21%
24%
27%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Q1
'10
Q2
'10
Q3
'10
Q4
'10
Q1
'11
Q2
'11
Q3
'11
Q4
'11
Q1
'12
Q2
'12
Q3
'12
Q4
'12
Q1
'13
Q2
'13
Q3
'13
Q4
'13
Q1
'14
Q2
'14
Q3
'14
Q4
'14
Net Profit
(%)
Net Profit
(B$)
Samsung Electronics Net Profit
Net Profit B$ Net Profit %
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Source: Samsung Electronics Results
Inventory
Inventories Jump Upwards
•Samsung had warned of excess
inventory for Q3, and appears to have
successfully addressed this in Q4, as
the company exited the quarter with
30 days of stock, down from 36 in
September
•However this contrasts dramatically
with Apple’s, who reported less than 3
days at the end of the same quarter
•The bulk of this stock is likely to be in
smartphones and their components,
most of which also belong to Samsung
(unlike Apple, which pushes
ownership back up the supply chain)
•In the fast-moving electronics
business, excess stock is typically very
damaging, as it ages quickly
•Failure to get better control of stock
will lead to ongoing pricing actions
and increased sales promotion spend.
Such actions tend to prove disruptive
to the overall business, and in
particular to the channel
0
5
10
15
20
25
30
35
40
45
50
0
5,000
10,000
15,000
20,000
25,000
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
Days of
Stock
Inventory
(M$)
Samsung Electronics Inventory
Inventory M$ Days of Stock
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Tablet vs iPad: Still Behind
Tracking the trailing 12 months (current and 3
previous Quarters) eliminates seasonality, and
gives a better indication of the longer term trends
Source: Apple Results, Gartner, IDC and others
0
20,000
40,000
60,000
80,000
0
5,000
10,000
15,000
20,000
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
Units (000s)
Q Units
(000s)
Tablet Units vs iPad
Tablets kU Tablets Trailing 12m kU Apple iPads Trailing 12m kU
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Source: Samsung Electronics Results
Regional Splits
Red Ink Everywhere
•Sharp declines were
reported in every region
Home Market Drops
•South Korea declined
19%, with Apple the
main beneficiary
America Turns
•The Americas saw a
second quarter of
decline, but it remains
Samsung’s largest region
Europe Fades Further
•29% YoY growth in 2012
has given way to big
declines in 2014, with
another sharp drop in Q4
Asia/Africa Reverses
•Even the promising Asia/
Africa region posted a
sharp decline
China Worrying
•Massive 44% growth in
2013 has reversed
catastrophically in this
critical region, with the
sharpest decline of all
Most recent
Share YoY
8% -19%
38% -15%
22% -31%
17% -25%
14% -34%China B$
Asia/Africa B$
Europe B$
America B$
South Korea B$
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
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
Regional Splits
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Source: Samsung Electronics Results
Samsung Galaxy S6
Galaxy S6 / S6 Edge Announced at MWC
•Samsung announced the next generation of its Galaxy
smartphones at MWC on 1st March, to ship from 10th April
•Galaxy S6 is the mainstream 5.1” device
•Galaxy S6 Edge adds curved edges to the screen, but was
positioned as less mainstream, with premium pricing
•The new Galaxy’s have discarded the plastic feel in favour of a
more Apple feel - rounded edges, matched with glass both front
and back (a blend of iPhone 4 and 6?)
•However a glossy finish on the back has attracted some criticism,
suggesting it detracts from the overall design
•Impressive specifications: a 64 bit Exynos processor made by
Samsung’s own semi-conductor division (hence no longer using
Qualcomm chips)
•These are built on its new 14nm process - stepping ahead of the
20nm standards seen elsewhere (including in Apple’s A8)
•Wireless charging, new fingerprint sensor, 2,560 x 1,440 pixel
screen and upgraded cameras also feature
•Discarded: waterproofing, removable battery, microSD slot -
were these really desired by customers?
•Pricing TBC, but rumoured to be very similar to iPhone
•Overall: a quality product, but still based on Android: many
Chinese vendors will aim to match the features at half the price
Mid iPhone Cycle Launch Creates Opportunities
•With the iPhone 6 having had a clear run for two quarters, the
new Galaxy’s will mount a serious challenge through Q3 and Q4
•However many other vendors launched products at MWC,
including Acer, HTC, Lenovo, LG, Microsoft, Sony, and ZTE
9. Aquilla
Samsung’s Q4 Audited Results Analysis
These popular slides cover an in-depth analysis of Samsung’s Q4 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
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