Samsung Electronics Co reported a 58 percent surge in profit, topping projections as demand for its memory chips remained strong enough to outweigh concerns about display supplies to Apple Inc.
Operating income rose to 15.6 trillion won (US$15 billion) in the three months that ended last month, preliminary results released yesterday by the company showed.
That compares with the 14.5 trillion-won average of analysts’ estimates compiled by Bloomberg. Sales for the first quarter climbed to 60 trillion won, compared with the 61.3 trillion won average projection by Bloomberg.
The first-quarter result, which includes the sales of its marquee Galaxy S9 smartphone unveiled in February, might ease concerns about its display business after Apple sold fewer-than-projected iPhone X handsets with Samsung-made displays.
Still, resilient demand for memory chips used in phones and servers could keep the electronics maker on track to post another year of record profit, after replacing Intel Corp last year as the world’s biggest chipmaker by sales.
“Memory chips are the loyal son of Samsung,” Yuanta Securities Korea Co analyst Lee Jae-yun, said. “Still, momentum might slow toward the end of this year, with price rises likely to be less steep than last year.”
Samsung shares fell about 1 percent in Seoul, as the KOSPI declined on concern over US tariffs. The stock is down more than 5 percent this year, after climbing 41 percent last year.
Samsung is reporting its first results since de facto chief Jay Y. Lee was released from prison on a suspended sentence for a bribery conviction in February.
The 49-year-old vice chairman has since traveled to Europe to meet with business partners and been spotted in Canada.
Samsung will not provide net income or break out divisional performance until it releases its final results, most likely on April 26, when a conference call is scheduled.
Last month at a shareholders’ meeting, Samsung reorganized its leadership to separate the roles of business executives and board members, responding to public calls to improve its transparency.
Shareholders also approved a 50:1 stock split that is to take effect following a trade suspension from April 30 to May 3.
“Demand for servers canceled out the effect of slow sales for iPhone X and premium Chinese smartphones,” Kim Yang-jae, an analyst at KTB Investment & Securities Co, wrote in a report. “Demand is exceeding market expectations.”
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