Strong Galaxy S7 sales to boost Samsung’s Q1 earnings - Mobile World Live

Strong Galaxy S7 sales to boost Samsung’s Q1 earnings

07 APR 2016

Samsung Electronics expects its Q1 operating profit, driven by brisk sales of its newly launched flagship Galaxy S7, to exceed earlier estimates by as much as KRW1 trillion ($862 million).

The company estimates operating profit for the January-March quarter will increase 7.5 per cent to approximately KRW6.6 trillion ($5.7 billion), on revenue of about KRW49 trillion, up 3.3 per cent from a year ago. South Korean brokerage houses had forecast a consensus operating profit of KRW5.6 trillion, according to Yonhap Infomax.

Sales of the Galaxy S7 series are expected to surpass 10 million units in the first quarter, above the company’s original estimate of seven million, Shin Hyun-joon, an analyst at LIG Investment & Securities, told the Korea Herald.

While Samsung doesn’t break down its results by business group, KDB Daewoo Securities estimates the mobile division’s operating profit will jump 19 per cent to KRW3.3 trillion, the newspaper reported.

It’s worth noting that Samsung’s total operating profit would still be 22 per cent lower from the first three months of 2014. But, Samsung’s latest numbers indicate that its smartphone business, which generates nearly half of its total sales, is slowly recovering.

Samsung unveiled the Galaxy S7 and Galaxy S7 Edge at Mobile World Congress in Barcelona in late February and the devices went on sale in March. The company warned in December that 2016 would be a tough year, with its smartphone shipments to fall by as much as 12 per cent and plans to reduce output to between 420 million and 430 million units.

Rising margins
Richard Windsor, commenting on Samsung’s results in his Radio Free Mobile blog, reckons that with an “extra” KRW1.1 trillion in operating profit its margins were near 14 per cent rather than the 9-10 per cent where they have been for the last five quarters.

He said it’s unlikely that a single model, which was available for only part of the quarter, could have been responsible for such a large swing in profitability. “I suspect that the semiconductor business also had an impact on these figures.”

KDB Daewoo Securities estimated that its semiconductor business will post a 17 per cent drop in operating profit in Q1 to KRW3.24 trillion, the Herald reported.

The company will release its final Q1 results later this month.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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