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Samsung Electro-Mechanics shifts to profits in Q4

This photo, provided by Samsung Electro-Mechanics Co. on Jan. 20, 2021, shows the company's slim three-socket multilayer ceramic capacitor (MLCC). (Samsung Electro-Mechanics Co.)
This photo, provided by Samsung Electro-Mechanics Co. on Jan. 20, 2021, shows the company's slim three-socket multilayer ceramic capacitor (MLCC). (Samsung Electro-Mechanics Co.)
Samsung Electro-Mechanics Co., a major electronics components maker in South Korea, on Wednesday said its fourth-quarter net profit in 2020 swung to the black from a year earlier on the back of increased sales of its products amid the growth of 5G and automotive sectors.

The Samsung Group affiliate reported a net profit of 204.9 billion won ($185.4 million) for the October-December period, swinging from a loss of 21.1 billion won a year earlier.

The company said in a regulatory filing that it posted 252.7 billion won in operating profit for the fourth quarter, up 73 percent from a year ago. Revenue rose 16.6 percent on-year to 2.08 trillion won.

For the whole of 2020, Samsung Electro-Mechanics' net profit jumped 18.1 percent on-year to 623.8 billion won. Operating income for the year was 829.1 billion won, up 11.9 percent from a year earlier, while sales climbed 6.4 percent on-year to 8.2 trillion won.

Samsung Electro-Mechanics said strong sales of multilayer ceramic capacitors (MLCCs) and package substrates boosted its profitability on the back of the expanding 5G communications market, while increased supply of rigid-flexible printed circuit boards (RFPCB) for OLED products also helped its performance.

On a quarter-on-quarter basis, Samsung Electro-Mechanics said its fourth-quarter earnings were underachieving due to its customers' inventory adjustments and weakness of the US dollar.

Compared to the third quarter, its fourth-quarter sales and operating profit were down 6 percent and 18 percent, respectively.

By business sector, its component unit posted revenue of 964.5 billion won in the fourth quarter, up 24 percent from a year ago, as MLCC shipments for automotive solutions and Chinese smartphone makers increased.

Its module business posted sales of 564 billion won, down 4 percent from a year earlier due to weak seasonality for camera modules for flagship smartphones.

Its fourth-quarter revenue from the substrate business was 557.9 billion won, up 30 percent from a year ago, on increased demand of substrates used for mobile application processors and central processing units.

For the first quarter of 2021, Samsung Electro-Mechanics expected all of its businuess units to see improved sales compared with the previous quarter, except its substrate business as RFPCB sales are likely to decline on low seasonal demand.

In a conference call, the company also forecasted that orders for its automotive MLCC this year are likely to increase 20 percent from a year ago.

Samsung Electro-Mechanics said it plans to expand capital expenditures for this year, adding that its new plant in Tianjin, China, has completed setup of initial facilities and is preparing for mass-production.

Shares in Samsung Electro-Mechanics dropped 1.15 percent to 214,500 won, underperforming the broader KOSPI's 0.57 percent decline. Its fourth-quarter earnings were announced before the market closed. (Yonhap)
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