By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Seoul, South Korea — Samsung Electronics reported higher revenues and net profit based in part on strong smartphone sales in the first quarter, ended March 31.
Revenues were 52.87 trillion won on a consolidated basis for the first quarter compared with the prior year’s 45.27 trillion won. Net profit was 7.15 trillion won compared with the prior year’s first-quarter profit of 5.05 trillion won.
Highlighting the quarterly performance, the IT and mobile communications (IM) division, which comprises the mobile communications, networks and digital imaging businesses, achieved profitable results backed by strong smartphone sales coupled with reduced marketing expenses, Samsung said.
The IM division rang up the first quarter with revenues of 32.82 trillion won, higher than the prior year’s 22.47 trillion won. Sales of Galaxy S III and Galaxy Note II devices aided profit margins for mobile communications, but in the second quarter global demand for smartphones is forecast to dampen, compounded by heightened competition. The January-to-March quarter again proved trying on the PC business, while the networks business came around with a stable supply of LTE and 4G telecommunications equipment.
“Although market uncertainties from the European crisis and the slow global economic recovery are still lingering, we expect to increase R&D spending for strengthening our competitiveness ahead of planned new product launches,” said Robert Yi, senior VP and head of investor relations. Yi cautioned, “We may experience stiffer competition in the mobile business due to expansion of the mid- to low-end smartphone market while TV growth will continue to wane in developed markets.”
In its display panel business, Samsung anticipates second-quarter panel demand to recover in line with the approach of higher seasonal demand and the launch of new products. For TV panels, demand is likely to rise toward the end of the second quarter and the company will focus its energies on enhancing its premium product portfolio, including large-size TV panels more than 60 inches in size. In OLED panels, continued growth momentum is expected with the launch of new products in the premium smartphone category.
The IM division registered operating profits of 6.51 trillion won on 32.82 trillion won in revenue for the March quarter. Out of the total IM earnings, the mobile business was accountable for 31.77 trillion won in sales.
The consumer electronics division —encompassing the visual display, digital appliances, printing solutions and health and medical equipment businesses — posted an operating profit of 230 billion won for the quarter on revenues of 11.24 trillion won. The visual display business accounted for 7.43 trillion won of earnings.
In the TV market, demand was down in a quarter-on-quarter comparison but improved year on year as emerging markets maintained growth. Amid these challenges, Samsung continued to expand sales of its premium TV lineup, including region-specific LED models, and saw shipments of its premium ES7000/8000 series gain 25 percent on-year.
For the digital appliances business, despite adverse economic conditions driving down global demand during the first quarter, Samsung sustained growth in mass-market products within major markets. Looking ahead, modest growth in the home appliance market is forecast, although emerging markets are likely to enjoy slightly more robust demand.
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