Samsung Revenues Surge As Profits Hit $24M

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Samsung Australia, who five years ago were struggling to get traction in the Australian market is now outperforming most other consumer electronics Companies including LG, Apple, Google and Sony.

According to documents lodged with the Australian Companies and Securities Commission, Samsung Australia has seen revenues jump from $1.29 Billion in 2008, to $1.6 Billion in 2009. 
Profits for the local subsidiary climbed to $24.2 Million in 2009 from $16.10 Million in 2009. Advertising and marketing budgets went from $53M to $60M while staff costs went from $25M to $29M. In comparison Google spends $81 Million on staff costs despite only have $110M in revenues in Australia.
In comparison Apple who has bragged about the success of their iPhone and iPad sales was only able to deliver a profit of $2.5 Million on similar revenues to Samsung.
LG Australia in comparison was only able to deliver a profit of $13K on revenues of $968 Million during the same period.
Sony, who report their financial results in July based on a Japanese year end of April is tipped to report a decline profits and sales after last year reporting record sales of $924 Million and profits of $34.59 Million.
According to Samsung Australia executives the Company is witnessing record growth across all divisions, including their recently restructured IT division which last year appointed former BenQ executive Phillip Newton to head the division.
In the AV market Samsung has grown 27% since May 2009, when the overall market has only grown 3% the Korean Company claims. Overall Samsung now has 20% of the total AV market.
 According to GfK data, Samsung has achieved the highest level of combined value sales across its four biggest AV categories – flat panel TV, digital camera, portable media player and DVD/Blu-ray Player market – from May 2009 through April 2010.

 
Head of Corporate Marketing for Samsung, Lambro Skropidis, said “It’s exciting to see the Samsung brand enjoying so much consumer support. Our tracking data shows that consumer awareness and preference for our brand has been continuing to build from year to year. The ultimate expression of consumer support is seeing preference translate into higher levels of sales at the store level.”
Several consumer electronics Companies are suspected of deliberately engaging in tax minimisation through the use of offshore subsidiaries in tax havens. Google for example has a service agreement with Google Ireland for the provision of sales and marketing advice. 
According to sources in the Australian Tax Office, some International consumer electronics Companies re set to be investigated for transfer pricing after delivering extremely low profits.
In the past several IT Companies have been prosecuted for transfer pricing practises. This often involves goods being sold to a local subsidiary at one price, often higher or equal to what it is being sold in Australia. This allows a local subsidiary to transfer profits out to an International Company located in a tax haven or low tax Country.
The Australian Tax Office said that the purpose of Australia’s transfer pricing rules is to counter the underpayment of Australian tax by businesses that are also International.
They claim that pricing for international dealings between related parties should reflect a fair return for the activities carried out in Australia, the Australian assets used (whether sold, lent or licensed), and the risks assumed in carrying out these activities.
They claim that transfer pricing is often referred to as ‘international profit shifting’.
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