Published : 2014-04-29 09:47
Updated : 2014-04-29 09:47
Samsung Electronics Co., the world's top maker of smartphones, said Tuesday its first-quarter net profit advanced 5.8 percent from a year earlier, led mainly by its handset division.
Net income came to 7.57 trillion won ($7.31 billion) in the January-March period, compared with 7.15 trillion won a year earlier, the company said in a regulatory filing.
Sales edged up 1.53 percent on-year to 53.68 trillion won in the first quarter, the company said. Its operating profit came to 8.49 trillion won, down 3.31 percent from the previous year.
The figures were in line with Samsung's guidance released earlier this month that estimated the first-quarter operating profit at 8.4 trillion won and sales at 53 trillion won.
Analysts said despite the sluggish demand for IT products due to seasonal factors, Samsung's gains in handsets lent support to its earnings, with the combined sales of smartphones estimated at 90 million units over the January-March period, compared with the 86 million posted in the previous quarter.
Samsung's IT and mobile business division, the company's main revenue source, logged an operating income of 6.43 trillion won during the first quarter, up 18 percent from the previous quarter, with the division's sales edging down 4 percent on-quarter to 32.44 trillion won.
Samsung's newest flagship mobile phone Galaxy S5 had limited impact on the sector's earnings, as its sales began at the end of March with full sales kicking off only in April, analysts said.
Still, Samsung's broad smartphone lineup, which includes phablet Galaxy Note 3, as well as other low-end models such as the Galaxy Ace or the Galaxy Grand, pushed the firm's expansion of market share around the globe.
Over the third quarter of 2013, Samsung's mobile division posted an all-time-high operating profit of 6.7 trillion won, which sank to 5.4 trillion won in the fourth quarter, sparking concerns that the global smartphone market was nearing its limit in growth.
Samsung's device solution division logged an operating income of 1.87 trillion won for the first quarter, down 13 percent from 2.14 trillion won the previous quarter.
By sector, its display panel business posted an operating loss of 80 billion won, compared with the operating profit of 110 billion won posted in the previous quarter.
Its chipmaking business' operating income also declined to 1.95 trillion won from 1.99 trillion won on-quarter, it said, due to a price drop in dynamic random access memory chips and NAND flash products.
The decline, however, was limited as Samsung boosted its productivity by slashing production costs. The increasing demands for chips helped recoup losses from the falling prices.
Data from market researcher DRAMeXchange said the fixed price of DDR3 2Gb 256Mx8 1333MHz chips, the standard in setting the price of DRAMs, came to $1.81 in the second half of March, down 8.1 percent from the $1.97 a year earlier.
Samsung's consumer electronics division logged an operating income of 190 billion won for the first quarter, down 71 percent from the 660 billion won the previous quarter.
Analysts said Samsung is expected to gather ground down the road this year, helped by full-fledged sales of the Galaxy S5.
The Galaxy S5, first introduced at the Mobile World Congress in Barcelona, Spain, comes with a 5.1-inch display and with a heartbeat sensor, the first in the industry, that can connect to Samsung's smartwatches to effectively manage workouts.
They said the relatively low price of the S5 will encourage sales. The model's local selling price is currently fixed at 866,800 won, below the Galaxy S4's initial price of 899,000 won, despite its updated features.
The anticipated rise in demand for large-size displays ahead of a series of global sports events slated for this year, such as the FIFA World Cup in Brazil in the summer, is also a plus for Samsung's earnings outlook, they added.
Shares of Samsung closed at 1,388,000 won on the Seoul bourse Monday, slipping 0.79 percent from the previous session's close, while the benchmark KOSPI fell 0.12 percent. The quarterly results were announced before the stock market opened Tuesday. (Yonhap)