Samsung Electronics Operating Profit Hits Record High in Q1 | Be Korea-savvy

Samsung Electronics Operating Profit Hits Record High in Q1

(image: Samsung Electronics)

(image: Samsung Electronics)

SEOUL, Apr. 6 (Korea Bizwire)Samsung Electronics Co. said Friday its first-quarter operating profit is presumed to have set another record by rising 57.58 percent from the previous year, apparently on the back of improved performance by its mobile division, with its chip arm also contributing to earnings.

The operating profit was estimated at 15.6 trillion won (US$14.6 billion) for the January-March period, compared with 9.89 trillion won posted a year earlier, the South Korean tech giant said through its earnings guidance report.

Sales moved up 18.69 percent to 60 trillion won, compared with 50.5 trillion won in the same three months of 2017.

The operating profit hovered above the market’s estimate of 14.5 trillion won, which was compiled by Yonhap Infomax, the financial arm of Yonhap News Agency, on 20 local brokerage houses.

The operating profit marked a 3-percent rise from the previous record of 15.1 trillion won posted in the fourth quarter of 2017. The latest number represents the fourth consecutive quarter in which Samsung has posted record operating profits.

Samsung did not offer performance and net profit estimate reports for each business division. The company will deliver its finalized earnings report later this month.

For the January-March period of 2018, analysts said Samsung probably posted better earnings from its chips and mobile divisions from a year earlier.

In the first quarter of 2017, the device solution division, which covers chips, posted an operating profit of 7.59 trillion won, followed by the IT and mobile arm with 2.07 trillion won. The consumer electronics division posted an operating profit of 380 billion won over the period.

Industry watchers presume the better-than-expected earnings of Samsung Electronics in the first quarter mainly came on the back of a strong showing by the company’s mobile business. The tech giant released the flagship Galaxy S9 in March, compared with the predecessor Galaxy S8, which hit shelves in April 2017, leading to relatively higher sales.

“The IT and mobile division may have posted an operating profit of 3 trillion won (in the first quarter of 2018) due to demand for the Galaxy S9 smartphone, which is estimated to have sold 10 million units,” DB Financial Investment said in its latest report.

Samsung posted weaker earnings from the smartphone segment due to the heightened competition with Apple in the fourth quarter of last year at 2.4 trillion won.

“The conservative outlook for the memory chip industry, which started in the second half of 2017, is likely to become groundless, due to the weaker-than-expected supply and the rising demand from the server segment,” DB Financial Investment said.

Analysts estimated that Samsung’s operating profit for chips alone may have reached some 11 trillion won, led by sustained global demand for DRAM and NAND flash products.

The display business of the device solution division, on the other hand, is presumed to have posted weaker earnings due to sluggish sales of Apple Inc.’s iPhone X. Samsung is a major supplier of OLED panels for the product.

As for the upcoming quarters, analysts, which estimate the sales of the Galaxy S9 to account for only 60-70 percent of the predecessor, claim that the market needs to maintain a wait-and-see approach on the mobile arm.

The rising challenges in the Chinese market also remain a hurdle for Samsung. Industry tracker Strategy Analytics estimated earlier that Samsung took up only 0.8 percent of the Chinese smartphone market in the fourth quarter of 2017, falling below 1 percent for the first time.

Chinese local brands, including Huawei, Oppo and Xiaomi, took up a whopping 70 percent over the cited period.

Samsung Electronics Vice Chairman Lee Jae-yong, who is the heir apparent of South Korea’s largest business group, has been resuming his activities after being released from prison in February. He had been put behind bars for nearly a year due to his connection to the corruption scandal of impeached former President Park Geun-hye.

Industry watchers, however, said Lee may face a bumpy road ahead due to the trade tensions between Washington and Beijing, along with the South Korean government’s bid to reform the country’s family-controlled business groups.

Shares of Samsung Electronics opened 1.52 percent lower compared with the previous session at 2,400,000 won. The first-quarter guidance was released before the market opened Friday.


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