UPDATE 2-Samsung eyes 2010 profit rise, double-digit sales gains

* Eyes double-digit sales growth; profit exceeding 2009
level

* Capex to rise from 2009, will keep investment flexible

* CEO says sees tougher outlook on increasing competition

* Shares up 0.5 pct; wider market rises 0.3 pct
(Adds details from meeting, byline)

By Miyoung Kim and Shin Jieun

SEOUL, March 19 (BestGrowthStock) – South Korea’s Samsung
Electronics Co. Ltd. (005930.KS: ) 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 (NOK1V.HE: ) and home rival
LG Electronics (066570.KS: ) in mobile phones, Hynix (000660.KS: )
and United States’ Micron Technology (MU.O: ) in memory chips and
Japan’s Sharp (6753.T: ) and Sony (6758.T: ) 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 (.KS11: ) was up 0.3 percent.
($1=1127.8 Won)

Investment Basics

(Additional reporting by Jungyoun Park; Editing by Jonathan
Hopfner and Muralikumar Anantharaman)

UPDATE 2-Samsung eyes 2010 profit rise, double-digit sales gains