Smartphones Push Samsung to Record $4.4 Billion First Quarter Profits

Significant growth in China drives increased sales through traditionally a slow quarter.

South Korea's Samsung Electronics reported April 27 a record net profit of $4.44 billion in the first quarter, thanks largely to strong smartphone sales.

The figure compares with net profit of $2.45 billion a year earlier and $3.52 billion last Oct.-Dec.

Samsung (IW 1000/12), the world's largest technology firm in revenue terms, also reported a record operating profit of $5.15 billion, a 98% rise year-on-year. Sales rose 22% to $40 billion.

The company credited brisk sales of its Galaxy Note and Galaxy S II devices for the record performance in Jan.-March, a quarter which is normally a slow period for technology companies after the year-end holiday period.

Some 73% of the total operating profit was generated by the telecoms business. The company is the world's second largest mobile phone maker after Nokia (IW 1000/61).

Samsung said its display panel business also pushed up profit margins despite a seasonal fall in sales of computer chips and televisions. It tipped further profit increases in coming months.

"We cautiously expect our earnings momentum to continue, going forward, as competitiveness in our major businesses is enhanced," Robert Yi, senior vice president, said in a statement.

Analysts expect the mobile division to remain the biggest cash generator for the company, which is the world's largest maker of flat panels, memory chips and televisions.

Growth in shipments of the Galaxy Note and Galaxy S II and other premium mobile devices yielded high returns, Samsung said, with "significant growth" in China, Central and South America, the Middle East and Africa.

Analysts expect the firm to continue posting record earnings in coming quarters thanks to increased sales of its mobile products. Its new version of the Galaxy S phone is to be unveiled early next month.

From April-June, demand for chips for personal computers would revive following the bankruptcy filing of Japanese supplier Elpida, said Seo Won-Seok, an analyst at Korea Investment and Securities.

Recovery in TV panels would also accelerate, Seo said, predicting a second-quarter net profit of $5.3 billion.

Samsung said demand for tablet and notebook panels was expected to increase on seasonal education-related demand. Demand for TV panels was expected to grow due to Chinese Labour Day sales and the London Olympics.

The company said it would continue to boost profitability by expanding sales of premium panel products such as 3D, large size and LED panels.

Smartphone demand was expected to continue to fuel OLED (organic light-emitting diode) panel sales.

Copyright Agence France-Presse, 2012


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