Samsung unveils quarterly profit boost

Analaysts expect Samsung's earnings to hit a fresh high in the second quarter as its new smartphone, Galaxy S4, goes on sale.

Story highlights

  • Samsung reports higher profits than expected for the first quarter
  • Sales of the company's lower-end smartphones increased in emerging markets
  • Release of Galaxy S4 could see Samsung beat Apple in the US mobile market, say analysts

Samsung Electronics on Friday said that first-quarter operating profit would be stronger than expected, as the world's largest electronics company by sales stepped up sales of lower-end smartphones in emerging markets despite growing price competition and slowing demand in developed markets.

The South Korean company estimated that it posted about Won8.7tn of operating profit in the first three months of this year, up 53 per cent from a year earlier, while sales increased 15 per cent to about Won52tn ($46bn). Samsung will officially announce first-quarter earnings this month.

Booming sales of its flagship Galaxy smartphones continued to drive Samsung's earnings growth this year while the company has made further inroads into emerging markets by broadening its mid-end product line-up as the smartphone market in advanced countries show signs of saturation. Samsung offers more than 30 models that cover nearly all segments of the smartphone market while rival Apple relies on a single high-end model.

Analysts quoted by Reuters estimate that Samsung sold up to 70m smartphones in the January-March period, up from 63m in the previous quarter, while Apple's iPhone shipments likely slid about 30 per cent to about 30m.

Although the earnings guidance beat estimates, the first quarter ended Samsung's five consecutive quarters of record profits. However, analysts expect the company's earnings to hit a fresh high in the second quarter as its new smartphone, Galaxy S4, goes on sale this month.

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Analysts say Samsung may gain the upper hand in its battle with Apple for market share in smartphones, as the company expands marketing for the new phone with a raft of fresh software and hardware features.

With the Galaxy S4, Samsung aims to retake the top spot in US mobile phone sales from Apple, after it was overtaken by the US company in the fourth quarter of last year.

Analysts expect Samsung's operating profit to probably exceed Won10tn in the second quarter on the back of Galaxy S4 sales. Lee Seung-woo, an analyst at IBK Securities, estimates that shipments of Samsung's flagship models including the Galaxy S4 could reach 37.8m units in the second quarter, boosting the company's average selling price by 17 per cent.

Samsung shares inched up 0.13 per cent to about Won1.5m on Friday. The shares have fallen 3 per cent over the past three months on concerns about the slowing smartphone market while Apple stock has dropped nearly 20 per cent in the same period.

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