Published: Fri, April 06, 2018
Research | By Raquel Erickson

Samsung Electronics operating profit hits record high in Q1

Samsung Electronics operating profit hits record high in Q1

Samsung Electronics tipped a surprise record first-quarter profit on Friday (April 6) as analysts said strong chip margins and the early launch of its flagship Galaxy S9 smartphone likely masked broader weakness in the mobile market.

Although the sales figures are down from the 65.98 trillion won that the South Korean company (~$62 billion) reported in the previous quarter, they're still way more than the 50.55 trillion won (~$47.5 billion) that it made in the same quarter past year.

Sales rose 19 percent to an estimated 60 trillion won.

That compares with the 14.5 trillion won average of analysts' estimates compiled by Bloomberg.

Profits from the mobile unit, which once contributed more than 70 per cent of Samsung's overall profits in its 2012-2014 heyday, accounted for less than 20 per cent of total profit in the fourth quarter a year ago. "Although gains in memory chip prices have slowed from the height of the chip boom, lower prices could also increase demand for chips, and Samsung has the cost-cutting ability to keep profits up", Greg Roh, an analyst at HMC Investment & Securities, told Reuters.

This marks the fourth straight quarter in which the South Korean tech firm has beaten its record operating profit.

In the first quarter of 2017, the device solution division, which covers chips, posted an operating profit of 7.59 trillion won, followed by the IT and mobile arm with 2.07 trillion won.

"There is no disagreement on how well Samsung's chip business is doing, but Samsung's mobile business must be doing better than we had expected", he said. The biggest contributors to the profit are believed to be its chips and smartphones, with the latter's business having surpassed expectations.

Samsung is reporting its first results since de facto chief Jay Y Lee was released from prison on a suspended sentence for a bribery conviction in February. A UBS report which predicted an increase in the supply of DRAM chips that are used in servers sent some shares, including Samsung's, tumbling.

But it wasn't all good news for Samsung; its shares fell 1 percent, and are down 5 percent this year after climbing 47 percent in 2017.

Like this: