Seoul, April 20, 2006
hynix Semiconductor Inc. (‘hynix’ or ‘the Company’, www.hynix.com) today announced the earnings results for its first quarter 2006, ended March 31, 2006.
The Company recorded the consolidated (which is the consolidation of the Company’s overseas subsidiaries) revenues of 1.45 trillion won which is an 18% decrease compared to the previous quarter’s 1.76 trillion won, but an increase of 14% from 1.27 trillion won in the same period last year. Such a decline in the sales was partly due to the strong Korean won which had appreciated by 5% against US dollar sequentially, amid decline in the average selling price of the company’s two major products, DRAM and NAND flash, due to slow seasonality that wasn’t completely offset by the bit growth.
Despite of the strong price for 512Mb DDR2 during the quarter, prices of other DRAM products declined due to slow seasonal demand resulting the company’s weighted average selling price to decline by approximately 9%. Meanwhile, the Company’s weighted average selling price for NAND flash was down by 29% sequentially due to slow demand across most of the NAND flash applications. As a result, revenue contribution from NAND flash has declined to 36% of total revenue from 40% in the previous quarter while DRAM has increased to 64% from 60%.
The Company recorded operating profit of 360 billion won in the first quarter, a 31% decrease from previous quarter’s 522 billion won which resulted in the operating margin of 25%. Such reduction in the profit was primarily due to the worsened profitability of NAND flash due to severe price erosion amid strong Korean won against US dollar. As a result, the Company’s EBITDA in the first quarter recorded 691 billion won, with EBITDA margin of 48%, which is a decrease from 853 billion won of the previous quarter but remained flat in terms of margin. Net income for the first quarter of 2006 decreased by 61% to 294 billion won from 764 billion won of the previous quarter. The cause of the difference in net income is primarily due to the recognition of deferred tax assets which has resulted in income tax benefit of 452 billion won in the previous quarter.
As of end of the first quarter 2006, cash and short-term financial instruments decreased slightlyto 1.26 trillion won, which is a decrease by 21 billion won from previous quarter’s 1.28 trillion won. Meanwhile, debt level at the end of the quarter also decreased by 118 billion won from 1.90 trillion won at the end of last year to 1.78 trillion won at the end of first quarter of 2006. Consequently, debt to equity ratio at first quarter end has improved slightly to 27% from 30% of last year-end and net debt to equity ratio to 8% from 10%.
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Please note that the financial results discussed herein are preliminary and speak only as of March 31, 2006. Readers should not assume that this information remains operative at a later time. In addition, this information may include forward-looking statements that involve a variety of risks and uncertainties that could cause actual results to differ materially. For further discussion of these risks and uncertainties, readers should refer to hynix Semiconductor Inc.’s filings with the Korea Exchange. This document is neither an offer to sell nor a solicitation of an offer to sell any security of hynix. hynix securities may not be sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended.
