Samsung Elect Ltd

Hello everyone and welcome to the Samsung Electronics 2024 fourth quarter financial results conference call. I will be your coordinator. All participants will be in a listen only mode until we open the question and answer session following the presentation. As a reminder, this call is being recorded. I would now like to turn the conference over to the investor relations team. Please go ahead.

Thank you, coordinator. Good day to everyone tuning in from around the globe and thank you for joining Samsung Electronics earnings call for the fourth quarter of 2024. I am Daniel Oh, head of investor relations. Before we begin, I would like to inform you that quarterly results and supplementary materials to our earnings call are available on Samsung Electronics investor relations website at .samsung.com. Our webcast of today's call will also be uploaded to the website after the session. Following is our legal disclaimer for today's call. I want to remind you that some of the statements we will be making during today's call are forward looking based on the environment we currently see. They are and uncertainties that may cause our actual outcomes to deform materially from those expressed in today's discussion. The information we are giving you on this call this morning is as of today's date. For today's conference call, we will begin with the 2024 fourth quarter results and our outlook followed by updates on capital expenditures, shareholder returns and ESG. Executives from each business unit will subsequently provide updates on their respective businesses and then we will open the Q&A session. Now for the executive joining us on the call, I am pleased to introduce EVP central park, the head of corporate management office and our new CFO who is here today to discuss our financial result. And from the business unit, EVP representing memory. We join the call for system LSI. Joining the call for the first time for Foundry. Returning to the call EVP for Samsung display Corp. VP for the mobile experience business and finally EVP who recently got promoted for the conference over to our CFO central park. Thank you,

Daniel and good morning. It's an honor to communicate with our shareholders as the new CFO. The management team including myself and all the employees at Samsung electronics are very aware of the challenges the company is facing and we are fully committed to overcoming the current difficulties. Samsung's business portfolio spans a diverse range of industries that operate within different business cycles and market dynamics which cause fluctuations in our company's performance and we are confident that this diversity along with the progress being made in our businesses will drive gradual recovery. In the past, Samsung has often relied on its core strengths and capabilities to overcome hardship and achieve sustained growth. We firmly believe that the current challenges can be resolved safely and by overcoming these challenges Samsung can enter a new phase of growth. To our shareholders, I ask for your trust and support in our efforts and as the CFO, I am committed to enhancing communication with our investors and working to further reinforce your trust in Samsung electronics. Now, I am going to review the consolidated financial performance for the first quarter of 2024. The company's revenue declined 4% quarter on quarter to 75.8 trillion won. In the DS division, revenue increased by 4.8 percent, led by increased sales of high value added memory products for the server. In the DS division, revenue decreased by 10 percent mainly due to rising competition and the fading launch effects of new smartphone models. At the company level, annual revenue reached 300.9 trillion won, our second highest total ever surpassed only in 2022. SCG&A expenses increased to 22 trillion won or by 1.2 trillion won quarter on quarter, reflecting our continued commitment to secure future tech leadership through R&D. SCG&A expenses as a percentage of sales also increased, rising 2.7 percent point to 29.1 percent. Operating profit was 6.5 trillion won down 2.7 trillion won quarter on quarter due to soft market conditions, especially for IT products and the increase in expenditures, including R&D. Operating margin decreased 3 percent point to 8.6 percent. Regarding currency markets, the company's movements versus the Korean won, effective stronger US dollar, were offset by relative weakness in other currencies, resulting in slightly positive impact of roughly 0.7 trillion won company-wide. Now, I'd like to discuss our outlook for 2025. In the past, the Korean won was a little bit more than the Korean won. In the first quarter, improvements in the company's overall performance are likely to be limited by ongoing weakness in our semiconductor business. However, we'll push growth by increasing sales of smartphones offering differentiated AI experience in premium segments across the DX product lineup. In the DX division, memory will accelerate tech migration to address the demand for high value-added products. Following recent week performance, the system's semiconductor business will improve each effort to supply flagship products slated to launch in the second half, identify opportunities to win orders in emerging application areas, and advance the maturity of the two-nano process. For this play, our outlook remains conservative with a weakness in the overall market demand for smartphones expected to carry over from the first quarter. For the DX division, our strategy to improve our performance centers on driving sales growth of Galaxy S25 and Art Premium, AI-enhanced products across our lineup. Looking at 2025 as a whole, we aim to enhance our technology and product advantages in the AI market, advance efforts to meet further demand for high value-added products and drive growth in premium segments. In the DX division, we anticipate that market conditions will remain soft in the first half. Within this environment, we'll focus on securing our tech leadership for mid-to long-term growth and developing our portfolio of high-density, high-performance products. In addition, we aim to improve SOC capabilities and fully address the demand for ultra-high resolution image sensors. In Foundry, we are focused on securing orders from major customers while improving profitability in mature process technologies. For this play, we'll strengthen our leadership position in high-end products by enhancing and leveraging the advantages of our technology to our products. Furthermore, we remain committed to diversifying our portfolio by accelerating our expansion in the IT and automotive sectors. For the DX division, our strategy will focus on expanding our leadership in AI and continuing to deliver innovations and new technologies in premium segments, all while reinforcing value across our product portfolio. Now, onto the capital expenditures. CapEx in the first quarter of 2024 increased by 5.4 trillion won to 17.8 trillion won quarter over quarter, of which 16 trillion won was invested in DX division and 1 trillion won in this play. Annual CapEx for 2024 remained relatively steady at 53.6 trillion won of slightly from 53.1 trillion won in the first quarter of 2023. Of the 2024 total, 46.3 trillion won was invested in DX and 4.8 trillion won in this play. In memory, we increased our investment both on a -on-quarter and free of basis. With our continued focus on securing for the tech leadership through R&D and expanding capacity for advanced products such as HBM in foundry. However, we reduced the total annual CapEx to account for difficult market conditions. Meanwhile, in this play, we increased our annual investment, maintaining our commitment to bolstering our technology edge, especially in small to medium sized panels. For 2025, our specific investment plans are still in development, but in a general sense, we expect yearly memory investment to remain at the similar level. With that, I will turn the call back over to Damien. Thank you.