Samsung Electronics Co Ltd yesterday tipped a pickup in second-quarter profits after reporting a 12 percent earnings gain in the January-to-March period on the back of “robust” sales of its Galaxy S7 smartphones.
The mobile division was the South Korean firm’s biggest earner for the first time since the second quarter of 2014, in a sign that the world’s top smartphone maker has righted itself after two years of shrinking profits and market-share losses.
Boasting an improved camera, waterproofing and microSD storage support, Galaxy S7 models are on track to set a new first-year shipments record, lifting hopes that the mobile business will post its first annual profit gain in three years.
The firm said inventory levels remain low for the new models, suggesting good momentum.
“In the second quarter, we expect our solid performance to continue,” Samsung investor relations chief Robert Yi said in a post-earnings conference call, adding that the firm was “cautiously optimistic” operating profit would increase quarter-on-quarter.
Samsung’s January-to-March operating profit was 6.7 trillion won (US$5.84 billion), slightly above its earlier estimate of 6.6 trillion won. Revenue rose 5.7 percent to 49.8 trillion won, compared with its guidance for 49 trillion won.
Profit for the smartphone division jumped 42 percent from a year earlier to 3.9 trillion won, an almost two-year high, while profit for the chip division fell 6 percent to 2.6 trillion won, undercut by price declines for memory chips stemming from slower demand for products such as PCs.
Samsung said it expected further sales growth for its Galaxy S7 devices in the second quarter as well as from its mid-to-low tier products, flagging improved profitability on lower-end models such as the Galaxy A and J series.
The firm expects second-quarter mobile shipments, including non-smartphones, to fall slightly from 92 million units in the first quarter, partly as older smartphone models are phased out. Average sales prices are tipped to rise slightly.
Market researcher TrendForce Corp (集邦科技) said combined shipments for flat and curved-screen S7 models will reach 52 million by the year-end, surpassing the previous record of 47 million sets by the Galaxy S4.
Global shipments of smartphones shrank 3 percent in the first quarter from a year earlier in the market’s first year-on-year contraction, researcher Strategy Analytics said, reflecting growing strains on the industry.
Strategy Analytics said in a statement that January-March shipments fell to 334.6 million devices from 345 million in the same period a year earlier, as major markets such as China matured and concerns about the global economy weighed on consumer sentiment.
Samsung remained the world’s top smartphone maker, but saw shipments fall by 4.5 percent to 79 million, Strategy Analytics said. The firm’s market share dipped slightly, to 23.6 percent from 24 percent a year earlier.
Apple Inc remained in second place, but saw shipments fall 16 percent to 51.2 million from a year earlier as Strategy Analytics cited what it called “iPhone fatigue.”
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