Samsung Galaxy Pushes Profit 42%

Written by Oonagh Reidy     26/04/2013 | 15:14 | Category: MOBILE

Galaxy sales drive Samsung up, but PCs, TV weak.

Samsung Galaxy Pushes Profit 42%


Samsung revenues rose almost 17% to 52.87 trillion won the first quarter ended March 31.

Net profit for Q1 was 7.15 trillion won or US$6.4 billion - a rise of 42%, which it attributed to strong sales of its Galaxy smartphones, and reduced marketing expenses.

But one analyst is predicting Samsung profits may even exceed the mighty Apple, in the coming quarters.

"Samsung will deliver even stronger earnings in coming quarters, which makes me believe profit for the year will exceed that of Apple," Heo Pil Seok, CEO of Souel based at Midas International Asset Management told Bloomberg.

"The average selling price of smartphones may fall a bit once rivals roll out cheaper phones."

For the first time in 10 years, Apple reported a quarterly slump in profits to $9.5 billion which dipped 18%, it confirmed this week.

Samsung operating profit rose 54% year on year but also dipped 1% compared to Q4 last,  to 8.78 trillion won.

The figures were in line with its  earnings guidance of 52 trillion won disclosed on April 5.


The Mobile & Imaging Division rose 7% to 32.82 trillion won from the previous quarter.

The phone maker does not break down sales but said "sound" sales of Galaxy S III and Note II contributed to profit margins.  Galaxy Tab 2 series continued to sell "consistently."

The Galaxy S 4 maker accounted for one in three phones shipped in Q1 2013 - hitting a new record of 106.6m devices while arch rival Apple sold 37.4m - up 7%, new figures from Strategy Analytics show.

However, the worlds No. 1 phone maker warns global demand for smartphones is likely to dampen, with heightened competition from cheaper devices, in Q2. Samsung anticipates smartphone sales will stay flat in Q2 but will pick up later in the year.

 "As more mid- to low-end mobile devices enter the market and new premium products are rolled out, the race for market share will intensify," it said in a statement today.

The Korean giant says it "will strive to remain competitive amid difficult conditions by expanding the lineup of smartphones and tablets this year, starting with Galaxy Note 8.0 and the flagship GALAXY S 4" which goes on sale in OZ tommorrow, although Samsung has admitted some supply issues on the hero S4.


"Trying"

Samsung's first quarter proved "trying" on the PC front, however, said it will work to improve its product mix by increasing sales of mid- to high-end products.

Demand for consumer electronics products in emerging markets stemmed further sales losses but weak seasonality and a sluggish economy took their toll on TVs and home appliances.

In the TV market, demand was down quarter-on-quarter but improved year-on-year for the worlds biggest panel maker.

Samsung expects sluggish demand is likely to linger into the second quarter, but forecasts a marginal boost in TV market  on improved demand for high-end Smart TVs like 4K Ultra High Definition TVs and OLEDs, which it is tipped to unveil in Australia soon.

"Although market uncertainties from the European crisis and the slow global economic recovery are still lingering, we expect to increase R&D spending for strengthening our competitiveness ahead of planned new product launches," said Robert Yi, Sasmung Senior Vice President and Head of Investor Relations.

"We may experience stiffer competition in the mobile business due to expansion of the mid- to low-end smartphone market while TV growth will continue to wane in developed markets."

On the appliances front, there was sustained growth in 'mass market 'products in major markets despite adverse economic conditions,  and expects modest growth in the home appliance market although emerging markets are likely to enjoy more robust demand.