Samsung optimistic following tough Q1

Samsung optimistic following tough Q1

29 APR 2014

Samsung said that quarterly profit from its IT & Mobile Communications unit – which includes its handset business – decreased year-on-year, on the back of lower sales in the fiercely competitive devices market.

According to the company, although market demand for smartphones and tablets decreased during the period, it saw its profit increase sequentially “thanks to steady smartphone shipments, efficient execution on marketing expenditures and a positive impact from adjustments of one-off expenses”.

As usual, Samsung provided no guidance on shipment volume, but said it “continued to see solid sales of Galaxy S4 and Galaxy Note 3”, while also unveiling its latest flagship – Galaxy S5.

For its tablet business, it said it “maintained solid tablet sales momentum” – in this case giving shipment volume of “nearly 13 million units” – during the slowest quarter. It also reinforced its mid-to-high-end lineup, with the launch of its Galaxy Note Pro and Galaxy Tab Pro devices.

While not providing any detail, the vendor said its network sales decreased quarter-on-quarter, due to weak seasonality.

Looking forward, the company said that smartphone and tablet demand is expected to “slightly increase under continued weak seasonality”, but it will maintain its profit momentum with the global rollout of the Galaxy S5.

Against a backdrop of speculation that the previous Galaxy S4 has seen sales that were disappointing, Samsung said that “based on its differentiated features, and initial response from the market, Samsung expects Galaxy S5 to surpass sales of Galaxy S4”.

In 2014, the South Korean vendor said it will “actively respond to rapid demand growth in China’s LTE market by leveraging its LTE technology leadership, while further strengthening its product lineup across various price points”.

“Additionally, as the wearable device market is expected to grow, the company will reinforce its market leadership to gradually increase the wearable device business’ contribution to entire earnings”.

Operating profit for the IT & Mobile business was KRW6.43 trillion ($6.24 billion), down 1.2 per cent from KRW6.51 trillion in Q1 2013, but up 18 per cent from KRW5.47 trillion sequentially.

Revenue was KRW32.44 trillion, down 1.2 per cent year-on-year from KRW32.82 trillion. Mobile makes up 97 per cent of this unit’s sales.

On a group level, the company saw a net profit of KRW7.57 trillion, up 5.9 per cent year-on-year, on sales of KRW53.68 trillion, up 1.5 per cent from KRW52.87 trillion.

The company said it expects “to see profits rally in the second quarter and beyond”, on the back of improved sales of display panels and home appliances.

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Steve Costello

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