Image credit: Samsung booth, RSNA 2015, business wire
On 30th March, Samsung Medison, the Korean originated medical device OEM, published its audited financial results for 2019. These results show that sales activity weakened significantly during the fourth quarter, resulting in overall lower revenues for the year. The Q4 2019 sales revenue reached ₩81.9 billion, compared with ₩102.4 billion during Q4 2018, a decrease of approximately -20% year-on-year. This took full-year 2019 sales revenue to ₩325.6 billion, compared with ₩326.4 billion during 2018, a marginal decrease of -0.2% year-on-year.
The strong overall revenue growth during the first half of 2019 was driven by higher sales from international exports, partially offset by lower sales from domestic-based customers. At the end of Q3 2019, cumulative export sales were approximately +10% higher year-on-year and accounted for approximately 85% of total company revenues. During the fourth-quarter, export sales contracted significantly, resulting in full-year marginal growth of +1% year-on-year. From a geographical perspective, this marginal growth was driven by a combination of higher sales from North America and Asia, stable sales from Europe, offset by lower sales from Latin America, Middle East and Africa. Sales revenue originating from customers based in South Korea continued to trend lower throughout the year, resulting in full-year growth of -7.5% year-on-year.
In North America, which has historically been the largest global market for medical ultrasound, Samsung continued to focus on driving sales of its premium ultrasound platforms. This included the HERA W10 and HERA I10 systems, with a particular focus on the women’s health segment amongst large U.S. hospitals. The overall sales revenue originating from customers based in North America was approximately +11% higher, relative to 2018.
In Asia, mainly China, Samsung concentrated on improving sales and distribution in the western and southern provinces. Sales were relatively sluggish in the first half of the year although strengthened during the second half, which contributed toward full-year growth of +15%, relative to 2018.
In Europe, overall sales revenue remained stable relative to 2018, although sales performance varied significantly by product line. For example, the sales performance of HERA W10 was “outstanding”, which was complemented further by the launch of the HERA I10 system during June-19.
Within emerging markets such as the Middle East and Central and South America, political and diplomatic instability and intensified exchange rate fluctuations led to a rapid deterioration in the market conditions and lower sales revenue relative to 2018. In addition, in Russia, since 2018 the market for ultrasound equipment has been expanding due to increased levels of government investment in order to improve and expand health infrastructure. Samsung has taken advantage of this to develop its sales activities in order to capture market growth.
Production volumes and portfolio pricing
At its Hongcheon manufacturing plant, the company reported maximum production capacity for ultrasonic products of 15,015 units during 2019. In terms of production volumes, the company reported total production of 12,676 units, compared with 13,869 units in 2018, a decrease of -8.6% year-on-year. Based on a proprietary calculation, the pricing index strength for ultrasound units is estimated to be in the +10-15% range, relative to unit prices during Q1 2016 (base period). This favourable pricing action is perhaps due to Samsung’s recent success from the launch of its new ultrasound platforms as well as its strategy to capture greater premium sales.