Q1 profits of Samsung Electronics surge by 44%
SEOUL (SOUTH KOREA) – Despite a fall in chip earnings after a storm halted US output of Samsung Electronics Co Ltd, the company said that its first-quarter profit likely rose 44%. Analysts have attributed the surge to brisk sales of smartphones and TVs.
The South Korean technology giant forecast January-March operating profit of 9.3 trillion won ($8.32 billion), matching a weighted average analyst forecast from Refinitiv SmartEstimate.
Analysts said Samsung’s mobile division likely saw operating profit soar more than 1 trillion won to about 4.15 trillion won after its flagship Galaxy S21 smartphone series outsold the previous version by a two-to-one margin in the six weeks since its January launch, according to research provider Counterpoint.
A lower starting price for the flagship helped sales for the world’s largest smartphone maker during the quarter, with the S21 priced $200 lower than the S20, Counterpoint said.
Profit in Samsung’s television set and home appliance business also likely more than doubled to around 1 trillion won, analysts said, due to continued stay-at-home demand.
Cross-town TV and home appliance rival LG Electronics on Wednesday announced its largest-ever preliminary quarterly operating profit of 1.5 trillion won for January-March.
In Samsung’s chip division, analysts said profit likely fell 20% to 3.6 trillion won due to the cost of ramping up domestic production as well as losses at its Texas plant following a mid-February stoppage, blunting the benefits of strong demand.
U.S. memory chip peer Micron Technology Inc last month forecast third-quarter revenue above analyst estimates due to rising demand brought about by a global shift to remote work.
The price of DRAM chips widely used in laptops and other computing devices rose 5.3% in January-March from the previous three months, showed data from TrendForce. Analysts expect that trend to continue as a global chip shortage spurs on buyers to snap up supplies.
“Prices are likely to rise further in the current quarter due to solid demand for servers,” said analyst Park Sung-soon at Cape Investment & Securities.
Samsung also said, in a preliminary earnings release without offering any breakdown of the figures, that revenue likely rose 17% from the same period a year prior to 65 trillion won.
Its share price traded down 0.2% after the release versus a 0.2% rise in the benchmark KOSPI. The stock has risen about 6.2% so far this year versus the KOSPI’s 8.8%.