Samsung profits hit record high on smartphone boost

Friday 26 April 2013 19.05
Analysts expect Samsung profits to reach new highs in coming quarters
Analysts expect Samsung profits to reach new highs in coming quarters

Samsung Electronics said its first quarter profit jumped to a record high as smartphone sales remained strong, despite the impending launch of an updated version of its flagship Galaxy phone.

Sales of consumer electronics usually slow in the first three months of the year after the Christmas shopping season.

Analysts thought this effect would be compounded by the release of the Galaxy S4 smartphone, which has just launched on a number of Irish networks.

Many delay buying handsets until the newest model is available, which can hinder sales ahead of new releases.

Apple has cited the upcoming release of a new iPhone model as a reason for a slowdown in sales of older models.

Analysts expect Samsung's profits to reach new highs in the second and third quarters if S4 sales are strong.

Lee Don-Joo, head of sales and marketing at Samsung's mobile division, said sales of the S4 will outdo its predecessor, the Galaxy S III.

Samsung said its net profit in the three months from January to March surged 42% to 7.2 trillion won ($6.5 billion) from 5 trillion won a year earlier.

That increase came despite booking a one-time charge against earnings related to settlement of its intellectual property battle with Apple. Analysts estimated the charge at $600m.

Sales rose 17% to 52.9 trillion won. Operating profit was up 54% to 8.8 trillion won, in line with its preliminary results released earlier this month. Profit was up 2% from the previous quarter's result, beating market expectations for a fall.

Sales of the S III smartphone and the oversized handset called the Galaxy Note remained strong and shored up profit, Samsung said.

The company also said it spent less on marketing its mobile devices than it did in the previous quarter when competition heated up.

Samsung's IT and Mobile Communications division that makes smartphones, tablets, PCs and cameras reported 6.51 trillion won in operating income for the first quarter, up 56% from a year earlier and its highest since Samsung reorganised the division to merge PC and handset departments.

The company capitalised on global demand for smartphones with a range of mobile devices that come in a variety of screen sizes and prices, outpacing rivals including Apple and Nokia.

As the S4 goes on sales several months before rival Apple introduces a new version of iPhone, analysts said Samsung's streak of record-setting profit will not stop any time soon.

Market research firm IDC estimated that Samsung shipped 70.7 million smartphones during the first quarter, up 61% over a year earlier and capturing 33% market share. Apple, the second-largest smartphone maker, sold 37.4 million iPhones. Its market share fell to 17% from 23% a year earlier, IDC said.

The company's strong performance in the mobile market helped offset sluggish demand for TVs and a still weak recovery in display panel sales.

Samsung, based in Suwon, South Korea, is also the world's largest maker of memory chips, televisions, mobile handsets and liquid crystal display panels.