Lower sales lead Samsung fall in profit

Controlling costs despite an across the board decline in sales has helped Samsung improve its profit quarter-on-quarter for 1Q 2014, but operating profit is down on the same quarter last year.

In line with its guidance from earlier this month , a fall in quarter-on-quarter sales of 9 percent has led Samsung to post an operating profit of 8.49 trillion Korean won ($AU8.86 billion) for the first quarter of 2014.

The profit for the first quarter is up on the 8.31 trillion won posted for 4Q 2013, but down on the 8.78 trillion won of profit announced for 1Q 2013.

Compared to the same time last year, the Korean conglomerate saw 53.68 trillion won in sales, which was an improvement on the 52.87 trillion won from 1Q 2013, but an increase in research and development investment, as well as an increase in sales, advertising, and administration costs saw a dip in operating profit.

However, the company's net profit of 7.57 trillion won was an increase on 7.15 trillion won posted for Q1 2013, and also the net profit for last quarter of 7.30 trillion won.

Image: Samsung

The largest contributor to sales was Samsung's IT and mobile communications divison, which saw sales decline 4 percent QoQ, and profits rise by 18 percent.

Samsung said in a statement that although the first quarter of the year is traditionally slow, profit was increased thanks to strong demand for smartphones, and "efficient management" of marketing costs.

"We expect our overall earnings to improve starting from the second quarter, driven by improvements in the Display Panel segment and the Consumer Electronics division in conjunction with steady growth momentum in mobile and memory businesses," said Robert Yi, Samsung senior vice president and head of investor relations.

For the mobile division, weak sales are expected to continue for the next quarter, with the company expecting growth on mobile sales to occur with increased TD-LTE coverage in China, early upgrading in North America, and increased demand in emerging markets.

Samsung said that it expects the sales of its recently released Galaxy S5 smartphone to surpass the sales seen for the Galaxy S4 .

For tablets, Samsung said that it expects increased diversification from its competition as tablet growth slows. The company shipped nearly 13 million tablets in the quarter.

Growth in display sales is expected as the FIFA World Cup being held in Brazil later this year approaches, with the company growing sales in Latin America by 70 percent year-on-year.