Samsung the world's biggest flat screen maker

Samsung posted full year profits of 10.8 trillion won ($10bn; �5.35bn); its shares jumped 6% in Seoul on the news.

Sales rose 32% in the full year. But price squeezes in mobile phones, flat screens and semiconductors made for a miserable fourth quarter.

Net profit in the final quarter of 2004 was 32% down on July-to-September.

At 1.8 trillion won, fourth quarter profits were also 1.9% below the fourth quarter of 2003.

Tough times

The company said it had faced a "particularly difficult business environment" as the weak dollar chewed into profits and demand had fallen.

"Samsung was able to achieve record sales and profits of more than $10bn thanks to its cost competitiveness, product differentiation and ability to respond quickly to changes in the market place," said Samsung senior vice president Chu Woo-sik.

Samsung is one of only a handful of companies making profits of more than $10bn a year.

Slick design helped it overtake Motorola to become the world's second biggest mobile phone maker during 2004, a sign of how far the South Korean firm has moved towards building an iconic brand. It is also the world's biggest maker of liquid crystal display (LCD) screens.

But its success is peppered with problems. Profit margins for mobile phones are being squeezed, and prices for LCD screens have fallen in a glutted market. And although the semiconductor market is improving, the prices of memory chips used in digital cameras and camera phones are falling.

Samsung now expects profit margins on mobile phones to fall by around 3% to about 15% in the first quarter of 2005.

"A key concern for Samsung's earnings this year is by how much the demand for flat screen TVs could recover," said Daehan Investment Trust Management analyst Lee Ju-an.

The company said LCD price falls had eased in the final quarter of 2004, falling 14% in the September to December period, compared to the 38% drop in the previous quarter. It predicted prices would recover in the second half of this year.

Overall, the results for Samsung's difficult final months of the year were better than investors had feared.