By Lee Ji-yoon
Samsung Electronics on Wednesday predicted earnings will recover in the second quarter as its new flagship smartphone, the Galaxy S6, lures back customers and its chip division wins orders from rival vendors.
In a regulatory filing, the Korean tech giant said its net profit plunged 39 percent in the first quarter from a year earlier due to sluggish device sales.
Net income reached 4.63 trillion won ($4.32 billion) in the same period, compared with 7.6 trillion won a year earlier.
Operating profit came to 5.98 trillion won, down 29.6 percent from a year ago, with sales falling 12.2 percent to 47.1 trillion won.
Meanwhile, Samsung’s rival LG Electronics posted first-quarter sales of 13.9 trillion won, almost flat compared to a year ago, amid heated competition in the smartphone market.
The nation’s No. 2 tech giant said its net profit reached 38.4 billion won, a 58.5 percent drop from a year earlier while its operating profit was 305.2 billion won, down 36.2 percent.
Samsung’s first-quarter earnings, however, marks its strongest performance in three quarters, signaling that the company was rebounding from the worst earnings it suffered last year.
The company was especially upbeat about the positive market reaction to its new Galaxy S6 phones that went on sale earlier this month.
“The Galaxy S6 is gaining sales momentum as expected. It will be the best-selling S series model,” said Park Jin-young, executive director of mobile business division during a conference call. Samsung’s mobile chief Shin Jong-kyun also had hinted at record sales of more than 70 million units.
At the mobile division alone, the company logged 2.74 trillion won in operating profit, far outpacing the market forecast of 2.3 trillion won polled by local brokerages.
Samsung said reduced marketing costs and robust sales of low-end and mid-range handsets boosted profits.
The semiconductor business generated 2.93 trillion won in operating income in the first quarter, up 8.5 percent from the previous quarter and 50 percent from a year ago.
Despite the low-demand seasonality, solid demand for mobile and server chips drove up sales, Samsung said. The successful 20-nanometer microprocessor has also helped the company beef up price competitiveness, it added.
Samsung logged 520 billion won in operating profit for its display panel division, while it swung to the red in the consumer electronics sector from three months ago, with a net loss of 140 billion won.
In the meantime, Samsung regained its title as the top seller in the global smartphone market in the first quarter, beating its archrival Apple. The company sold 83.2 million smartphones worldwide during the period, making up 24 percent of total global shipments. Apple posted 61.2 million unit sales.