Samsung to hold capex at 2012 level

Updated 26 January 2013
0

Samsung to hold capex at 2012 level

SEOUL: Samsung Electronics Co. said quarterly profit soared 76 percent, boosted by the popularity of its Galaxy smartphones, which outsold the iPhone for a fourth straight quarter.
But the company said it expects earnings to decline during the current quarter because of seasonally low demand for consumer electronics.
It is also leaving its 2013 capital expenditure at the same level as last year at 23 trillion won ($ 21.5 billion), underlining uncertainty about the global economy and declining demand for personal computers.
The strong South Korean won is also becoming a negative for Samsung.
It expects more than 3 trillion won will be shaved from its 2013 operating profit due to the stronger local currency.
Net profit for the final quarter of 2012 totaled 7.04 trillion won ($ 6.6 billion), a 76 percent surge from 4.01 trillion won a year earlier. Analysts had expected 6.95 trillion won in net profit, according to financial information provider FactSet. Sales rose 19 percent over a year earlier to 56.06 trillion won and operating income jumped 89 percent to 8.84 trillion won.
Increased sales of smartphones were the key source of its profit growth.
Samsung, which overtook Apple Inc. as the top smartphone maker last year, said its operating profit from the division that makes and sells smartphones and tablets more than doubled to 5.44 trillion won in the fourth quarter, from 2.56 trillion won a year earlier.
Most analysts believe the Suwon, South Korea-based Samsung shipped more than 60 million smartphones, including the Galaxy S III and Galaxy Note II, during the three months ending in December, which would put the year’s smartphone sales at more than 200 million. Apple said it sold 47.8 million iPhones in the quarter.

Hong Kong-based research firm Counterpoint Research said Samsung took 33 percent market share in the fourth quarter, compared with Apple’s 21 percent.
Another market researcher IDC put Samsung’s share at 29 percent versus Apple’s 22 percent.
The company’s component divisions that make semiconductor products and display panels also benefited from a rise in demand for smartphones.
Sales of mobile processors that power popular devices such as Apple’s iPhones and Samsung’s own Galaxy smartphones boosted the bottom line.
The recovery in the display panel division was also led by strong sales of advanced mobile-phone screens called OLED, which are mostly found in high-end Samsung smartphones.
The display division posted 1.11 trillion won in profit compared with a small loss a year earlier.
Analysts said Samsung will likely see a continued rise in smartphone sales this year, especially in low- and mid-priced models where it doesn’t face competition from Apple.
Some analysts, including Young Park at Woori Securities, forecast Samsung smartphone shipments to rise as much as 50 percent this year from 2012 to over 300 million units.
Samsung executives said during the conference call with investors that smartphone demand will ease in the current quarter without giving guidance for the company’s performance.
But analysts said that Samsung could be little affected by market demand thanks to its variety of products that range from affordable to expensive devices.
“Even though they said demand for smartphone will slow down in the first quarter, Samsung will likely buck the industry trend and its own smartphone sales will go up,” said Byun Han-joon, an analyst at KB Investment & Securities.
Apple, which keeps its iPhone price high, might see iPhone sales plateau in coming years as more consumers snap up cheaper Android phones.
Still, Apple’s business has been more profitable because of the high price of the iPhone, which generates a larger profit per sales.
Samsung, which makes dozens of handset models a year and customizes them for mobile operators, also sells cheaper smartphones and spends about three times more on expenses such as marketing and advertising costs to promote its Galaxy brand phones and televisions.
Counterpoint Research estimates Apple, though it sold fewer handsets than Samsung, took 70 percent of profit in the handset market during the fourth quarter, while the South Korean rival claimed 25 percent.
Samsung is expected to introduce a new flagship smartphone in its Galaxy S series as early as April, which analysts say will shore up its bottom line.
The company said consumers seeking to replace its current handset and get a faster wireless connection through LTE networks will drive the demand for new models, easing concerns that sales would slow because of high rates of smartphone use in developed markets.
Part of its strategy to command higher prices from consumers has been adding new hardware features, such as a digital pen in the Galaxy Note series.
Samsung’s flexible display technology, which allows tablet computers to fold into mobile phones or bend the edge of the screen, is an effort to make its products stand out from others and to shore up its profit.
But such technology, which was shown in public earlier this month in Las Vegas, will still need more time for mass production.
Samsung said its profit will be hurt by unfavorable foreign exchange rates this year.
Robert Yi, head of Samsung’s investor relations, said the negative impact from the foreign exchange rates will exceed 3 trillion won ($ 2.8 billion), with the loss largely coming from the firm’s exposure to the euro.


Saudi insurance stocks soar as female drivers take to the road

Saudi Majdoleen Mohammed Alateeq, a newly licensed Saudi driver, gets out of her car in Riyadh on Sunday. The insurance sector is just one segment of the economy set to benefit from the lifting of restrictions on women drivers in the Kingdom. AFP
Updated 25 June 2018
0

Saudi insurance stocks soar as female drivers take to the road

LONDON: Saudi insurance stocks surged on Sunday, with investors expecting the sector to reap significant dividends following the lifting of the ban on female drivers.
Insurance stocks — one of the worst performing sectors on the Saudi bourse for the year to date — outperformed other classifications on Sunday, ending 2.4 percent higher, compared with a 1.8 percent rise for the Kingdom’s headline index.
Amana Insurance and AlRajhi Takaful were the best performers of the day, gaining 9.9 percent each. Tawuniya, the Kingdom’s largest insurer, ended Sunday 1.1 percent higher, with only one of the country’s 33 listed insurance providers closing lower for the day.
The lifting of restrictions on female drivers — which came into effect on Sunday after first being announced in September — is part of a series of wide-ranging reforms introduced as part of Saudi Arabia’s Vision 2030 economic transformation program, designed to diversify the economy away from a reliance on oil revenues.
The advent of women drivers is forecast to benefit the economy by significantly increase female participation in the workforce, and stimulating financial, insurance and retail sectors among others.
The insurance sector is set to draw particular benefit from the move, but may remain under pressure, according to rating agency S&P.
“We anticipate that efforts of the local authorities to tackle the large number of uninsured drivers, combined with the arrival of women drivers … and the introduction of additional benefits under the unified medical policy from July 1, will support further premium growth in the industry in the medium term,” said S&P in a research note in April.
“However, these factors may be offset by the large number of foreign workers that have already left or will be leaving the Kingdom in 2018.”
In spite of yesterday’s price surge, insurance stocks are 8.4 percent lower for the year to date. Tadawul as a whole is up 15.6 percent so far this year, making the bourse one of the world’s best performers for 2018.
Investor sentiment on Sunday was also boosted by investor optimism after index provider MSCI announced last week that it would upgrade Saudi stocks to its Emerging Markets Index from next year.
The widely anticipated upgrade — which puts Saudi equities on an index tracked by around $2 trillion worth of global assets — is expected to attract up to $40 billion of international funds, Tadawul CEO Khalid Al-Hussan told Arab News last week.
MSCI’s upgrade came after a similar move by fellow index provider FTSE Russell in February, which is also scheduled to come into effect from next year.
Banks were among the other bright performers on Tadawul on Sunday. Arab National Bank led gains, closing up 4.2 percent, while blue-chip names NCB and AlRajhi rose 1.6 percent and 2.3 percent respectively.
Some petrochemical companies also added value, Reuters reported, following a rise in oil prices after OPEC decided on only modest increases in crude production last week.
Outside Saudi Arabia, Gulf markets posted minor gains. In Dubai, where the index was flat, Air Arabia was unchanged. Shares in the airline have declined by more than 10 percent since early last week, when the company said it had hired experts to protect its business interests in private equity firm Abraaj, which has filed for provisional liquidation. The airline said its exposure was around $336 million.
Last week, the UAE’s securities regulator asked listed companies to declare their exposure to Abraaj.