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Samsung Electronics to see slight dip in profit

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Published : 2014-04-08 21:14
Updated : 2014-04-08 21:14

Samsung Electronics is expected to post a slight dip in profit in the first quarter of this year. The company said Tuesday its operating profit was estimated to be 8.4 trillion won ($7.9 billion), a drop of 4 percent from a year earlier, while its sales forecast remains flat at 53 trillion won.

The decline is due largely to lackluster smartphone sales, which are expected to bring the electronics giant 6 trillion won in operating profit, a decline from 6.5 trillion won from a year earlier despite more unit sales this time. Samsung sold around 90 million units in the first three months of this year and 69 million units in the same period last year. 

“The narrowing profit margin is because its smartphones became higher-end and required costlier parts,” said Kim Sung-in, a senior analyst at Kiwoom Securities.

Despite such setbacks, some factors appear favorable to its earnings. Samsung’s semiconductor segment saw a satisfactory performance as the price of dynamic random-access memory was stable for the January-March period. The business is expected to post around 2 trillion won in operating profit, according to Kim.

Further, a special bonus payment and currency fluctuations failed to hurt the tech company’s earnings, experts said.

For the second quarter, sales of the company’s new flagship smartphone Galaxy S5 are expected to prop up earnings.

“Samsung will post 9.3 trillion won in the second quarter,” said Lee Min-hee, an analyst at I’M Investment & Securities. “The global rollout of its new handset Galaxy S5 will boost its display business,” he added.

The consumer electronics business is also expected to pick up with a forecast increase in the demand for television sets thanks to global sporting events such as the 2014 World Cup in Brazil.

However, not all analysts are upbeat about second-quarter earnings as the sales prospects of the Galaxy S5 could be lower than its predecessor’s.

“Unlike the Galaxy S4, which sold 20 million units in the first quarter, the Galaxy S5 is expected to sell 18 million units in the first quarter and see a gradual drop,” said KB Investment & Securities Co. analyst Seo Won-seok.

Samsung Electronics’ shares dropped 0.21 percent to close at 1,394,000 won on the Seoul bourse on Tuesday.

By Shin Ji-hye (shinjh@heraldcorp.com)

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