Samsung's profits down again in first quarter

Tuesday 08 April 2014 18.30
Samsung made more than 30% of all smartphones sold in the world last year
Samsung made more than 30% of all smartphones sold in the world last year

Samsung Electronics has posted estimated first quarter operating profits of 8.4 trillion won ($7.96 billion).

This marked a second year-on-year decline in a row as growth in global smartphone sales slows.

The estimate was in line with market expectations, with analysts having forecast profits for the world's largest mobile phone maker of between 8.14 and 8.63 trillion won for the January-March period.

While the figure marks a 1.08% increase on the previous quarter, it is 4.3% lower than a year earlier.

The South Korean giant - the world's largest technology firm by sales - then recorded operating profits of 8.78 trillion won.

The figures come as growth in smartphone sales slows, with mature markets like North America and Europe near saturation.

This, coupled with the rapid expansion of smaller rivals like Chinese giant Huawei, has pressured Samsung to roll out cheaper handsets to woo consumers in emerging markets, especially China.

Nonetheless, estimated profits for Samsung's mobile division grew to 6.2 trillion won in the first quarter of this year, up from 5.5 trillion won in the three previous months.

This follows the earlier-than-expected release of its latest smartphone in South Korea, analysts said.

The Galaxy S5 - which Samsung hopes will cement its lead in the global smartphone market - came out in the home market on March 27, two weeks earlier than the global launch slated for April 11.

The company made more than 30% of all smartphones sold in the world last year, nearly twice the share of its arch-rival Apple. 

But Samsung is also faced with a daunting challenge to keep momentum in the increasingly saturated market.

Major handset makers have recently stepped up efforts to develop wearable devices, seen as a new source for growth - though few have managed to garner large consumer excitement or sales. 

Samsung's first Internet-enabled smartwatch, introduced last September, was greeted coldly by consumers who viewed it unfashionable. Its second edition, the Gear 2, was launched in February.

Apple is believed to be planning its own smartwatch launch soon, while Google is moving towards a wider consumer launch of its Internet-enabled eyewear Glass. 

Samsung is also under pressure to set aside more cash for legal bills as years-long patent battles against Apple continue. 

The two have locked horns in patent suits in several nations involving design and technologies on their smartphones and tablet computers.

A fresh patent trial opened in the US last week, with Apple vowing to prove that Samsung flagrantly copied iPhone features and should pay more than $2 billion in damages.

Samsung is believed to have set aside an additional 300 billion won in the first quarter for patent payments, according to analysts in Seoul.