Friday, January 31st 2020
SK Hynix Inc. Reports Fiscal Year 2019 and Fourth Quarter Results
SK hynix Inc. today announced financial results for its fiscal year 2019 and fourth quarter ended on December 31, 2019. The consolidated revenue of fiscal year 2019 was KRW 26.99 trillion won while the operating profit amounted to 2.71 trillion won, and the net income 2.02 trillion won. Operating margin for the year was 10% and net margin was 7%.
In order to respond to changing market conditions, SK hynix proactively adjusted both investment and output level last year to maximize business management efficiency. However, amid increasing global economic uncertainty, the increase of inventory burden and conservative purchasing policies on the side of the customers led to a slowdown in demand as well as price falls. As a result, the Company's earnings decreased year-over-year (YoY).
The consolidated fourth quarter revenue was 6.93 trillion won, while the operating profit amounted to 236 billion won with operating margin of 3%, and the net loss 118 billion won. Despite bearish US dollar, SK hynix's fourth quarter revenue increased by 1% quarter-over-quarter (QoQ) as the Company actively responded to demand recovery. However, the fourth quarter operating income decreased by 50% QoQ, due to the relatively low profitability of the product lines, the proportion of which had expanded to meet demand increase, and the cost burden of new technology migration.
DRAM bit shipments increased by 8% QoQ, and the average selling price dropped by 7%. NAND Flash bit shipments increased by 10% QoQ, and the average selling price remained stable.
While SK hynix sees the recent improvement in demand flows positively, the Company will carry out more prudent production and investment strategies, as complexities and uncertainties still remain much higher than in the past. As such, the Company aims to improve technology maturity rapidly in the process of technology migration and prepare for next-generation products, accelerating cost reduction.
For DRAM, SK hynix plans to increase the proportion of 1Y nm products and focus on markets which are expected to grow, such as LPDDR5. Additionally, the Company will begin mass-production of 1Znm products within 2020.
For NAND Flash, SK hynix will continuously increase the proportions of 96-layer products and SSD sales. The Company will also start mass-production of 128-layer products this year and aim to increase the sales in the high-density solution market.
SK hynix announced the new dividend policy in order to improve the predictability of the stakeholder return and reflect earnings fluctuations. The Company will fix the minimum dividend per share at 1,000 won, and pay out 5% of the annual free cash flow. According to the new policy, SK hynix's dividends per share in 2019 is determined 1,000 won, considering that the Company's free cash flow was below zero in fiscal year 2019.
In order to respond to changing market conditions, SK hynix proactively adjusted both investment and output level last year to maximize business management efficiency. However, amid increasing global economic uncertainty, the increase of inventory burden and conservative purchasing policies on the side of the customers led to a slowdown in demand as well as price falls. As a result, the Company's earnings decreased year-over-year (YoY).
DRAM bit shipments increased by 8% QoQ, and the average selling price dropped by 7%. NAND Flash bit shipments increased by 10% QoQ, and the average selling price remained stable.
While SK hynix sees the recent improvement in demand flows positively, the Company will carry out more prudent production and investment strategies, as complexities and uncertainties still remain much higher than in the past. As such, the Company aims to improve technology maturity rapidly in the process of technology migration and prepare for next-generation products, accelerating cost reduction.
For DRAM, SK hynix plans to increase the proportion of 1Y nm products and focus on markets which are expected to grow, such as LPDDR5. Additionally, the Company will begin mass-production of 1Znm products within 2020.
For NAND Flash, SK hynix will continuously increase the proportions of 96-layer products and SSD sales. The Company will also start mass-production of 128-layer products this year and aim to increase the sales in the high-density solution market.
SK hynix announced the new dividend policy in order to improve the predictability of the stakeholder return and reflect earnings fluctuations. The Company will fix the minimum dividend per share at 1,000 won, and pay out 5% of the annual free cash flow. According to the new policy, SK hynix's dividends per share in 2019 is determined 1,000 won, considering that the Company's free cash flow was below zero in fiscal year 2019.
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