SEOUL - South Korea's Samsung Electronics Co. Ltd. is targeting a higher operating profit and double-digit growth in sales in 2010, fueled by strong demand for its flat screens and memory chips.
The comments by the world's top maker of memory chips and LCD flat screens and No.2 handset maker at its annual shareholders' meeting on Friday reinforce the medium-term positive outlook it offered in January and cement hopes for strong first-quarter results, driven by better-than-expected demand from China.
But longer-term prospects have turned cloudy as heavy investments have raised oversupply concerns and any slowdown in the global economy may sap consumer demand, hitting the profitability of handsets and appliances.
"The global economy is likely to sustain its growth momentum this year, helped by economic stimulus measures taken worldwide...but we see increased competition, which will toughen our business outlook," Choi Gee-sung, who took over as Samsung's chief executive in December, said at the meeting at Samsung's headquarters in Seoul.
"There are business uncertainties including foreign exchange rates, but we aim to achieve double-digit sales growth and operating profit of more than 2009 level by improving cost competitiveness and increasing market share," Choi said.
The CEO's forecast was in line with market expectations. Samsung is expected to report a 14 percent rise in 2010 sales to 155.4 trillion won on a consolidated basis and 42 percent jump in operating profit to 15.5 trillion won this year, according to Thomson Reuters I/B/E/S.
"Samsung Electronics will have no problem seeing double-digit growth in its sales this year. Its memory chip business in particular is looking strong, and the television part will be very good too," said Koo Ja-woo, an analyst at Kyobo Securities.
In 2009, Samsung, reported record consolidated sales of 136.3 trillion won ($120.8 billion) and a record operating profit of 10.9 trillion won, powered by a strong recovery in chips and liquid crystal display panels.
Samsung's main challenges for this year include a potential LCD sector slowdown in the second half and boosting its smartphone business, Koo of Kyobo Securities said.
It competes with Finland's Nokia and home rival LG Electronics in mobile phones, Hynix and United States' Micron Technology in memory chips and Japan's Sharp and Sony in flat televisions.
Samsung, which said earlier it was seriously considering raising this year's capital spending target of 8.5 trillion won, said on Friday it would flexibly manage investment and tie it to operational performance.
Choi, who has been at Samsung for more than three decades and headed its home appliances and telecoms division before becoming CEO, is pushing for the hardware-oriented company to focus more on software and content, and aims to triple group revenue to $400 billion by 2020.
The meeting, which opened with music from an orchestra and was held under heavy security at the firm's new offices, saw no major disruption by shareholders, who often made vocal demands for more transparent management and higher dividends in the past. A number of shareholders stood up and praised the management, with some even arguing executives should be paid more.
At 0152 GMT, shares in Samsung, Asia's biggest technology firm with a market value of $104 billion, were up 0.5 percent. The broader Korean stock market was up 0.3 percent.
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