Earnings Release Q2 2016

Samsung Electronics

July 2016
Disclaimer

The financial information in this document are consolidated earnings results based on K-IFRS.

This document is provided for the convenience of investors only, before the external audit on our 2Q 2016
financial results is completed. The audit outcomes may cause some parts of this document to change.
This document contains "forward-looking statements" - that is, statements related to future, not past, events.
In this context, "forward-looking statements" often address our expected future business and financial
performance, and often contain words such as "expects, "anticipates, "intends, "plans, "believes, "seeks
or "will ". Forward-looking statements" by their nature address matters that are, to different degrees, uncertain.

For us, particular uncertainties which could adversely or positively affect our future results include:

The behavior of financial markets including fluctuations in exchange rates, interest rates and commodity
prices
Strategic actions including dispositions and acquisitions
Unanticipated dramatic developments in our major businesses including CE (Consumer Electronics),
IM (IT & Mobile communications), DS (Device Solutions)
Numerous other matters at the national and international levels which could affect our future results

These uncertainties may cause our actual results to be materially different from those expressed in this document.
Income Statement
(Unit: KRW Trillion) 2Q 16 % of sales 2Q 15 % of sales 1Q 16
Sales 50.94 100.0% 48.54 100.0% 49.78
Cost of Sales 29.61 58.1% 28.96 59.7% 30.37
Gross Profit 21.33 41.9% 19.58 40.3% 19.41
SG&A expenses 13.18 25.9% 12.68 26.1% 12.73
- R&D expenses 3.50 6.9% 3.34 6.9% 3.57
Operating Profit 8.14 16.0% 6.90 14.2% 6.68
Other non-operating income/expense 0.24 - 0.50 1.0% 0.36
Equity method gain/loss 0.004 0.01% 0.04 0.1% 0.01
Finance income/expense 0.16 0.3% 0.19 0.4% 0.07
Profit Before Income Tax 8.07 15.8% 7.63 15.7% 7.12
Income tax 2.22 4.4% 1.88 3.9% 1.87
Net profit 5.85 11.5% 5.75 11.9% 5.25

Key Profitability Indicators

2Q 16 2Q 15 1Q 16 2Q 15 1Q 16 2Q 16

ROE 13% 13% 12% 24% 25%

24%
Profitability (Net profit/Sales) 0.11 0.12 0.11
Asset turnover (Sales/Asset) 0.84 0.84 0.82 13% 12% 13%
Leverage (Asset/Equity) 1.35 1.35 1.35
EBITDA Margin 25% 24% 24% ROE EBITDA Margin

1
Segment Sales & Operating Profit
Sales
(Unit: KRW Trillion) 2Q 16 2Q 15 1Q 16 YoY QoQ
50.94 48.54 49.78 5% 2%
CE 11.55 11.20 10.62 3% 9%
VD 6.61 6.66 6.42 1% 3%
IM 26.56 26.06 27.60 2% 4%
Mobile 26.07 25.50 26.94 2% 3%

DS 18.43 17.87 17.18 3% 7%

Semiconductor 12.00 11.29 11.15 6% 8%
- Memory 8.43 8.49 7.94 1% 6%

DP 6.42 6.62 6.04 3% 6%

Operating Profit
(Unit: KRW Trillion) 2Q 16 2Q 15 1Q 16 YoY QoQ

Total 8.14 6.90 6.68 1.25 1.47

CE 1.03 0.21 0.51 0.82 0.52

IM 4.32 2.76 3.89 1.56 0.42

DS 2.79 3.87 2.33 1.08 0.46

Semiconductor 2.64 3.40 2.63 0.75 0.01
DP 0.14 0.54 0.27 0.41 0.40

Note) CE (Consumer Electronics), IM (IT & Mobile communications), DS (Device Solutions), DP (Display Panel)
Sales for each business unit includes intersegment sales.
2015 sales and operating profit of each business stated above reflect the organizational structure as of 2016.
2
Q2 Results and Outlook by Business Units

Semiconductor DP
[Q2 Results] [Q2 Results]
Memory : Earnings remained solid driven by demand increase for OLED: Earnings improved, driven by expanded shipments of
Mobile/SSD newly launched high-end products and improved
- DRAM : Expanded sales of 20nm high-density mobile/server DRAM utilization rate
- NAND : Continued strong demand for enterprise V-NAND SSD - OLED shipments: increased by mid-teen% QoQ
S.LSI : Earnings improved led by stronger demand for 14nm
LCD : Shipments increased, led by growth of UHD TV
mobile AP in premium smartphones and sales increase of
market, continuous trend toward large-sized screen
high megapixel CIS
as well as improved supply-demand conditions; yield
[2H Outlook]
of TV panel has been stabilized
Memory: Expect trend of high-density products to increase; - TV panel shipments: (unit) increased by high-single% QoQ
Expect market conditions to stabilize (area) increased by mid-teen% QoQ
- DRAM : Expect demand to increase, with the increase of high-density
smartphones and expansion of new server platform; [ 2H Outlook]
Focus on product mix to maximize profitability OLED : Expect earnings to increase, led by expanded sales of
- NAND : Focus on addressing strong V-NAND demand of SAS/NVMe value-added products such as flexible and
SSD and high-density mobile storage high-resolution, under overall demand increase
S.LSI: Expect to maintain stable revenue led by solid demand for LCD : Recover earnings by expanding shipments of high-end
14nm foundry and sales increase of LSI products
products such as UHD/ultra large-size
[Q3 Outlook]
[ Q3 Outlook]
Memory: Expect supply-demand conditions to improve, due to
release of new smartphones and solid mobile demand for OLED : Maintain solid earnings by actively addressing customer
China under strong seasonality demand
S.LSI : Expect demand for 14nm mid to low-end AP to increase LCD : Expand sales with focus on value-added panels, under
and CIS sales to remain solid in China improved balance of supply/demand and stabilized yield
3
Q2 Results and Outlook by Business Units

IM CE
[Q2 Results] [Q2 Results]
Mobile : Earnings increased QoQ/YoY, led by S7 global sales TV : Earnings improved YoY, led by strong sales of premium
expansion products such as SUHD/Curved TVs amid new product
- Product mix improved, due to increased portion of Edge in S7 launch and EuroCup impact
- Mid to low-end maintained solid profitability through - Shipments of UHD/Curved/60+ large sized TV increased YoY
streamlining of product line-ups . UHD TV Shipments: 49%YoY, Curved 19%, 60+ 33%
Network : Earnings improved due to increased LTE investment DA : Under strong seasonality of Air conditioner, earnings
of major carriers improved YoY, led by expanded sales of premium products
such as Chef Collections and New Air conditioner, etc.
[2H Outlook]
Market : Expect smartphone/tablet demand to increase [2H Outlook]
due to strong seasonality TV : Focus on improving earnings YoY by addressing year-end
SEC: Focus on YoY earnings increase by strengthening H/E line-up seasonal demand, mainly with premium products
and maintaining solid profitability of mid to low-end products
. Strengthen marketing activity for SUHD/Quantum Dot technology
- High-end: Maintain solid sales led by new flagship product launch
DA : Focus on sales of new premium innovative products such as
and continuous global sales of S7
Family Hub/Chef Collection, and Enhancing B2B Biz.
- Mid/Low : Expand global sales of A/J series while streamlining
product line-ups [ 3Q Outlook]

[ 3Q Outlook] TV : Under weak seasonality, secure profitability by expanding

Focus on smartphone sales increase under strong seasonality sales of high value-added products
with launch of new model, while expecting marketing expense to DA : Focus on sales expansion of Family Hub and Active/Add Wash
increase QoQ due to seasonality
4
[Appendix 1] Financial Position

(Unit : KRW Billion)

Jun 30, Mar 31, Jun 30,

2016 2016 2015

Assets 243,960.7 241,239.8 231,690.9

- Cash 77,140.4 72,670.7 62,283.2

- A/R 26,081.8 25,505.6 25,578.1

- Inventories 17,858.7 18,749.9 19,311.2

- Investments 12,271.6 12,325.7 14,016.8

- PP&E 84,635.0 85,565.3 84,666.3

- Intangible Assets 5,247.8 5,375.0 5,530.4

- Other Assets 20,725.4 21,047.6 20,304.9

Total Assets 243,960.7 241,239.8 231,690.9

Liabilities 62,118.2 62,913.6 57,754.2

- Debts 12,244.8 11,265.6 11,313.7

- Trade Accounts and N/P 7,344.7 7,829.7 6,766.9

- Other Accounts and N/P
& Accrued Expenses 17,833.4 20,164.9 17,710.9

- Income Tax Payables 1,863.8 1,894.9 1,750.6

- Unearned Revenue
& Other Advances 2,570.3 2,655.9 2,263.5

- Other Liabilities 20,261.2 19,102.6 17,948.6

Shareholders' Equity 181,842.5 178,326.2 173,936.7

- Capital Stock 897.5 897.5 897.5

Total Liabilities &
Shareholder's Equity 243,960.7 241,239.8 231,690.9
Cash = Cash and Cash equivalents, Short-term financial instruments, Short-term available-for-sale securities,
Long-term time deposits, etc.

Jun 30, Mar 31, Jun 30,

2016 2016 2015
Current ratio 271% 258% 251%
Liability/Equity 34% 35% 33%
Debt/Equity 7% 6% 7%
Net debt/Equity -36% -34% -29%
Current ratio = Current assets/Current liabilities
[Appendix 2] Cash Flow
(Unit : KRW Trillion)

2Q '16 1Q '16 2Q '15

Cash (Beginning of period) 72.67 71.54 58.91

Cash flows from operating activities 13.34 8.72 10.71

Net profit 5.85 5.25 5.75

Depreciation 4.83 5.12 4.95

Others 2.67 -1.66 0.01

Cash flows from investing activities -4.39 -3.39 -6.03

Increase in tangible assets -4.01 -4.74 -6.29

Cash flows from financing activities -4.51 -4.26 -1.67

Increase in debts 0.70 -1.45 1.25

Acquisition of treasury stock -2.45 -2.90 -

Payment of dividends -2.92 - -2.92

Increase in cash 4.47 1.13 3.37

Cash (End of period) 77.14 72.67 62.28

Cash = Cash and Cash equivalents, Short-term financial instruments, Short-term available-for-sale securities,
Long-term time deposits, etc.

Current State of Net Cash (Net Cash =Cash - Debts)

(Unit : KRW Trillion)

Jun 30, Mar 31, Jun 30,

2016 2016 2015
Net Cash 64.90 61.41 50.97

Cash = Cash and Cash equivalents, Short-term financial instruments, Short-term available-for-sale securities,
Long-term time deposits, etc.