Samsung hits $7.9B in Q1 profits on strong mobile sales

Samsung is reporting an operating profit of 8.78 trillion won and revenues of 52.87 trillion won for its first quarter, which was boosted by strong sales in its Galaxy S3 and Note 2 mobile devices.
Written by Kevin Kwang, Contributor

Samsung Electronics has declared operating profit of 8.78 trillion won (US$7.9 billion) for its first quarter financial earnings report, aided ably by the strong sales performances of its Galaxy range of mobile devices. However, the company was keen to downplay expectations for its mobile business in the second quarter citing "heightened competition".

In a statement released Friday, the South Korean electronics giant announced revenues of 52.87 trillion won (US$47.5 billion) for the first quarter ended March 31, 2013, which represented a 6 percent decrease from the previous quarter. Its consolidated net profit for the quarter reached 7.15 trillion won (US$6.4 billion), it added.

The figures released were not far off the earnings guidance released earlier this month, when it estimated operating profit to be 8.7 trillion won (US$7.7 billion) and revenue of 52 trillion won (US$46.2 billion).

Mobile business to face stiffer competition

Delving into its various business units, Samsung highlighted the performance of its IT & Mobile Communications (IM) Division which generated more than half of the total revenues with 32.82 trillion won (US$29.5 billion) in the first quarter. This represented a 7 percent increase from the previous quarter, and was aided by "sound sales" of its Galaxy S3 and Note 2 devices, the company said.

The IM Division, which also comprises of Networks and Digital Imaging, also saw a stable supply of sales from its LTE telecoms equipment, it added.

Robert Yi, senior vice president and head of investor relations, warned that the company may not perform as well in the following quarter though. He said: "We may experience stiffer competition in the mobile business due to expansion of the mid- to low-end smartphone market."

Samsung expects smartphone sales to stay flat in the next quarter, but will pick up again in the second half of the year. It will aim to remain competitive by expanding its range of smartphones and tablets this year, starting with the Galaxy Note 8.0 and Galaxy S4 smartphone which is expected to be released to the market at the end of this month. 

TV sales continue to be sluggish

As for its Consumer Electronics Division, which includes the Visual Display, Digital Appliances, Printing Solutions and Health and Medical Equipment businesses, first quarter revenues reached 11.24 trillion won (US$10.1 billion). The Visual Display unit alone accounted for 7.43 trillion won (US$6.7 billion), it added.

Samsung noted the seasonally low demand for consumer electronics in the first quarter dampened overall results, but while demand for TVs was down quarter-on-quarter its yearly comparison improved as emerging market maintained growth.

It also holds out hope that a marginal boost in TV sales will take place in the second half of this year as consumers demand for high-end TV products while phasing out older models.

At this year's Consumer Electronics Show (CES), the South Korean electronics manufacturer said it was banking on more seamless connectivity between its electronic products, particularly its smart TVs, and content to attract new sales.


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