In the Feb. 14, 2022, file photo, a man walks past an advertisement for Galaxy S22 smartphones in Seoul. (Yonhap)
SEOUL, April 7 (Korea Bizwire) – Samsung Electronics Co. said Thursday it is likely to report its best first-quarter earnings in four years on the back of solid chip and mobile demand.
In its earnings guidance, the South Korean tech giant estimated its operating profit at 14.1 trillion won (US$11.5 billion) for the first three months of the year, up 50.3 percent from a year ago.
Its January-March operating income estimate beat the market consensus of 13.2 trillion won in the data compiled by Yonhap Infomax, the financial arm of Yonhap News Agency from 10 brokerage houses.
Samsung projected its quarterly sales at 77 trillion won, up 17.7 percent from a year ago. The figure is also above the market consensus of 76.8 trillion won.
If the preliminary result stands, it would mark the company’s record first-quarter sales and the third consecutive quarter that the tech giant logs 70 trillion won in quarterly sales.
Operating profit and sales are estimated to rise 0.56 and 1.66 percent, respectively, from the previous quarter.
The world’s largest memory chip and smartphone maker did not break down the performances of its respective business divisions. It will announce the detailed earnings later this month.
In the January-March period, prices of memory chips, core products that support a great portion of Samsung’s top and bottom lines, held up better than expected.
Analysts estimated Samsung’s semiconductor business to earn 25 trillion won in sales and 8 trillion won in operating profit, up from 19.1 trillion won and 3.37 trillion won from a year ago.
Park Sung-sun, an analyst at Cape Investment and Securities Co., said Samsung benefited from the fallout of the contamination incident at Japanese chipmaker Kioxia’s fabrication facilities in February, which affected the company’s NAND production.
“Because of the incident, Samsung appeared to have received more orders for memory chips at higher-than-expected prices,” he said.
Robust businesses of smartphones and high-end home appliances are also believed to help boost the tech giant’s profits.
The undated file photo shows Samsung Group’s flag at its office in Seoul. (Yonhap)
Samsung launched its latest flagship smartphone series, the Galaxy S22, in late February.
Sales of the series are expected to soon surpass 1 million in South Korea, according to the company, which is two weeks faster than the Galaxy S21 series did and 47 days faster than the mega-hit Galaxy S10 did in 2019.
Preorders were more than double those for the Galaxy S21 series worldwide.
The upbeat forecast came amid a series of external challenges, ranging from volatile raw material costs spurred by Russia’s invasion of Ukraine to the global supply chain disruptions.
Samsung said there was no immediate impact from the war in Ukraine on its chip production thanks to “diversified sources for materials” and ample inventory of key materials like neon.
Last month, it temporarily suspended product shipments to Russia due to major disruptions in global logistics in the region. But its TV factory in Kaluga, southwest of Moscow, is in normal operation, Samsung said.
Samsung’s performance in the remaining year is forecast to become stronger as chip prices are expected to rebound, driven by increasing demand.
“Amid limited supply, demand for memory will start to pick up, especially from data centers, in the third quarter,” Eo Kyu-jin from DB Financial Investment Co. said.
“The company is predicted to have its best performance ever this year, with annual sales of 318.7 trillion won and an operating profit of 63.9 trillion,” he said.
Despite the upbeat forecast, Samsung shares declined 0.73 percent to close at 68,000 won, the lowest closing price since Dec. 1, 2020, when it slumped to 67,800 won.
The benchmark Korea Composite Stock Price Index fell 1.43 percent to close at 2,695.86 amid concerns that the U.S. central bank could raise its interest rate more aggressively than initially thought.
(Yonhap)
