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Samsung posts solid performance

Publication Date : 30-04-2014

 

Despite slowing demand for electronic devices, Samsung Electronics, the world’s largest smartphone maker, posted 53.68 trillion won (US$52.07 billion) in revenue in the first quarter of this year, an 1.5 per cent increase from the same period a year ago, according to the firm’s quarterly earnings report on Tuesday.

The Korean tech firm recorded 8.49 trillion won in operating profit in the first three months, down by 3.3 per cent from a year earlier.

The year-on-year sales increase was led by the solid performance of the tech company’s mobile and semiconductor business units, whose sales stood at 32.44 trillion and 9.39 trillion won, respectively.

The sales of the mobile business alone account for more than 60 per cent of the firm’s total sales earnings.

“Despite the low market demand for electronic devices in the January-March quarter, Samsung achieved a solid performance thanks to mobile and chip businesses,” the company said in an official statement.

Samsung, which had the global launch of its new flagship Galaxy S5 smartphone earlier this month, is currently trying to strengthen its leadership in the smartphone market amid the ever-mounting challenges posed by Chinese manufacturers and its archrival Apple.

Samsung said in a conference call on the quarterly earnings that it shipped 111 million handsets during the first quarter, adding that smartphones accounted for nearly 80 per cent of the shipped handsets.

The Korean tech company is also working to diversify its income sources by reinforcing its other core businesses, including memory chips, data storage and security solutions.

The firm’s semiconductor business unit posted 9.39 trillion won in sales, up from 8.58 trillion won a year earlier, while recording 1.95 trillion won in operating profit, up by 0.88 trillion won from a year earlier.

“Samsung will continue to enhance profitability by improving cost competitiveness through the expansion of 20-nanometer class process migration and increasing offerings of high-value-added differentiated products,” Samsung said in the statement.

Although the sales and profit margins surpassed the estimates by market analysts in the first quarter - largely thanks to the mobile and chip business - concerns seem to be on the rise as the earnings in almost all businesses run by Samsung fell quarter-to-quarter and year-on-year, according to some market analysts.

Samsung’s device solution division consisting of display panel business and chipmaking business logged an operating income of 1.87 trillion won for the first quarter, down 13 per cent from 2.14 trillion won the previous quarter.

The display panel business posted an operating loss of 80 billion won, compared with the operating profit of 110 billion won posted in the previous quarter.

Samsung’s consumer electronics division logged an operating income of 190 billion won for the first quarter, down 71 per cent from the 660 billion won the previous quarter.

Analysts expect Samsung to rebound later this year on the back of full-fledged sales of the Galaxy S5 and the anticipated rise in demand for large-sized displays during the FIFA World Cup in Brazil this summer.

 

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