Samsung Electronics profit beats expectations on robust sales of S7 smartphone

USA Today reports that although the Korean tech giant does not disclose complete earnings until next month, it previewed operating profits in advance of around $5.6 billion (6.6 trillion Korean won), which is up 10 percent from the six trillion won reported in the same period in 2015.

Samsung Electronics in a preliminary report Thursday confirmed that first-quarter sales totaled a better-than-expected W49 trillion and operating profit W6.6 trillion (US$1=W1,154). It posted its lowest net profit in four years in the previous quarter. Until last month, the market expected the electronics behemoth to register a profit of no more than 5 trillion won.

Analysts said the company's first-quarter mobile business is believed to have enjoyed a favorable performance apparently on the back of the Galaxy S7, which went on sales earlier in March. According to them, the smartphone will feature an IP68 water resistant body, just like the Galaxy S7 and Galaxy S7 edge flagships.

According to Bloomberg, not only is Samsung capitalizing on the specs and features of the Galaxy S7, it will also use the momentum to launch the Galaxy Note 6 a little earlier than expeced.

Korea, the largest market for Galaxy phones, is the only market that has seen a flat growth possibly to the relatively strong sales of the Galaxy S6 past year.

The result will encourage shareholders after a disappointing 2015 that saw Samsung lose more than US$8.0bil (RM31.06bil) in market value, with its flagship smartphone business sandwiched by top-end rivals like Apple's iPhone and lower-end devices from fast-growing Chinese outfits like Huawei and Xiaomi.

Samsung's figures represent the median of an estimated earnings range - meaning that the actual declared operating profit could be anywhere between KRW6.5tn and KRW6.7tn.

Greg Roh, analyst at HMC Investment, told the news agency Reuters that Samsung's earnings had "peaked this year" as marketing costs were set to rise in the coming quarters, pushing down profits.

Last year Samsung launched the Note 5 smartphone in August, a month ahead of when the company had typically introduced the new version of its phablet as it sought to gain an advantage over Apple's iPhone 6s and iPhone 6s Plus, which were launched in September.

The slower-than-expected pace at which Samsung's moving to advanced LCD production technology is also hurting the business.

After the estimate release, Samsung shares climbed 0.5% in early trading on the South Korean stock market.

Samsung is continuing to reduce the number of telephones in its lineup as it tries to cut spending and focus on competitive devices.

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Source: Samsung Electronics profit beats expectations on robust sales of S7 smartphone