Image credit: Samsung booth, RSNA 2015, business wire
On November 16th, Samsung Medison, published its financial results for Q3 2020. These show that sales continued to contract during the quarter, although began to recover. Total company sales were ₩73.7 bn, compared with ₩76.1 bn during Q3 2019, a decrease of approximately -3% year-on-year. This took cumulative 2020 sales to ₩244.0 bn, compared with ₩243.7 bn during 2019, a decrease of approximately -8% year-on-year.
The sales contraction during the quarter was driven by lower sales from ultrasound diagnostic equipment which was partially offset by higher sales from other parts of the portfolio, mainly, sales of the AccE GM85 mobile x-ray system which is being used as a diagnostic device for Coronavirus. During the quarter, sales from ultrasonic diagnostic equipment declined by -₩3.7 bn (-5.6%) resulting in lower cumulative 2020 sales of -₩35.2 bn (-16%). Sales declined mainly in China, Europe and the United States, where the market size is large. During the quarter, the demand for ultrasonic diagnostic equipment began to recover as public health measures were eased, particularly within Europe and the United States. While ultrasound sales were lower, sales of general radiography equipment increased, helping to mitigate these declines. During the quarter, sales from the ‘other’ segment increased by +₩1.2 bn (+12.6%) resulting in higher cumulative 2020 sales of +₩15.5 bn (+64%). The ‘other’ segment includes the sales of general radiography equipment from Samsung Electronics.
Global market share
The company estimates that it captured approximately 5.3% of the global market share of ultrasound imaging sales during the first nine months of 2020.
Production volumes are circa -15% lower but capacity remains unchanged
At its Hongcheon manufacturing plant, the company reported maximum production capacity for ultrasonic products of 11,050 units during the first nine months of 2020, compared with 11,115 units during the same period in 2019. The company reported a total production volume of 7,917 units during the first nine months of 2020, compared with 9,354 units during the same period in 2019.
The ASP of ultrasound equipment weakened by circa -6.5% year-to-date
The ‘Ultrasound System Price Index’, a proprietary calculation from PMI, indicates that the average selling price (ASP) of Samsung ultrasound equipment fell by approximately -6.5% during the first nine months of 2020, relative to the same period during 2019. Since the companies launch of HERA W10, a premium platform for obstetrics and gynaecology, the ASP for the ultrasound portfolio has been trending upward off the back of strong sales within the European and North America markets. In recent periods, Samsung has invested significant resources in order to grow its premium ultrasound business. This has been predicated upon securing premium technology in key areas such as imaging performance and workflow as well as developing diagnostic aids based on artificial intelligence (AI) technology. That said, the ASP fell abruptly during the first quarter of 2020. My perspective on this is that this is likely to be a reflection of the pandemic situation i.e. customers deferring capital investment decisions on new premium systems, rather than aggressive price cutting. Earlier this year, the company also launched the RS85 Prestige, another top-of-the-line premium system to capture premium market share, although new sales are likely to have also been negatively impacted by the pandemic.
Outlook for Q4 2020
Due to the ongoing Coronavirus pandemic and concerns around increasing infection volumes, the company noted that a “full-scale market recovery (during the fourth quarter) is unlikely” [translated from Korean]. The company is continuing to focus on strengthening it’s “non-face-to-face marketing activities” and distribution capabilities for its global customer base in order to promote sales in coming quarters.