Samsung Electronics Co., the world's top maker of smartphones, memory chips and flat-panel TVs, is projected to reap a record 10 trillion won ($8.76 billion) in operating profit in the second quarter thanks to steady sales of its latest Galaxy smartphone line-up and improved display and chip businesses, data showed Monday.
Samsung Electronics' operating profit in the April-June period is expected to reach some 10.22 trillion won, according to the data compiled by financial information provider FnGuide. The first-quarter operating income was 8.78 trillion won.
Second-quarter sales are projected to reach 59.17 trillion won, compared with the 52.87 trillion won in sales the previous quarter, and its net profit for the second quarter is put at 8.42 trillion won, the data showed. The data is based on estimates of 19 brokerage houses.
The South Korean tech giant is scheduled to release its second-quarter earnings guidance Friday.
"Its hefty marketing spending on the Galaxy S4 might have dented its mobile business's performance, but its semiconductor and display units are projected to have produced good results," said Kim Young-chan, an analyst at Shinhan Financial Investment.
Samsung said earlier that the Galaxy S4 would bask in good results that are stronger than its previous models.
Thanks to the flagship model that sold more than 40 million units worldwide, Samsung emerged as the world's biggest handset maker, beating out long-time market leader Nokia Corp.
Samsung said last month that global sales of its Galaxy S4 smartphones have surpassed the 10 million mark since its release in late April.
The milestone comes 20 days faster than its predecessor, the Galaxy S3. It took seven months and five months respectively for the Galaxy S and the Galaxy S2 to reach that milestone, Samsung said.
But a flurry of brokerage houses lowered their target prices for Samsung citing slower than expected sales of its new smartphone.
Last month, JP Morgan cut its target price for Samsung to 1.9 million won from 2.1 million won, sparking a massive sell-off of Samsung Electronics, the country's top market cap.
Local brokerage houses also followed suit cutting their target prices on the tech giant citing sluggish sales of the Galaxy S4, which could hurt its mobile business's profit margin.
Samsung's mobile business unit accounted for roughly 74 percent of total operating income in the first quarter of the year.
"Demand for high-priced, high-end smartphones shows a slow growth, which could hurt Samsung's profit margin," said Lee Seung-woo, an analyst at IBK Investment & Securities.
Earlier, brokerage houses projected a quarterly sales of 30 million Galaxy S4, but they are now expecting around 20-22 million units to be sold. (Yonhap News)