Samsung unit’s net profit zooms 867%

Samsung Electro-Mechanics had a highly profitable first quarter thanks to strong demand for electronic components used in smartphones.

The parts company that supplies electronic components to Samsung Electronics and other partners said on Friday that its operating profit rose to 80.6 billion won ($74.8 million), a 302.6 percent increase from a year earlier.

Net income surged to 41.7 billion won, an 867.1 percent jump compared with the same period a year ago.

But sales only rose by 2.8 percent year-on-year to 1.8 trillion won.

Samsung Electro-Mechanics cited strong sales of telecommunications modules and passive parts for smartphones, offsetting sales declines of power modules and other electric components used in TVs and PCs.

The company said the second quarter should be good too as it will begin producing a 16-megapixel camera module for the upcoming Galaxy S6 series.

It will also accelerate the production of main boards for the Galaxy S6 and S6 Edge.

Meanwhile, Kia Motors, the country’s second-largest automaker after Hyundai, said Friday its first-quarter net profit rose slightly from a year earlier in spite of a decline in revenue.

The company’s net income was 903.2 billion won during the January-March period, up 3.1 percent from 876.3 billion won last year.

Operating profit, however, dropped 30.5 percent year on year to 511.6 billion won while sales also plunged 6.3 percent to 11.18 trillion won as the company lost some traction in the local market, which is increasingly turning to imported foreign cars.

Kia Motors sold a total of 751,080 vehicles in the domestic and global markets during the first quarter, down 2.7 percent, or 20,790 units, compared with the same period a year earlier.

The company, an affiliate of Hyundai Motor, blamed unfavorable currency situations as a factor in its operating profit decline.

“Currency situations, especially falls in Russia’s ruble and the euro, worked against our profitability,” the company said in a press release. “Still, we could secure profitability and retain market share thanks to sales growth in major overseas markets and an expanded ratio of high-margin models.”

The earnings announcement came after Hyundai Motor reported lower-than-expected earnings Thursday, citing a fall in sales on global markets including Russia.

Kia Motors said its Russia sales fell 22.8 percent on-year in the first quarter.

Sales in Eastern Europe and Turkey also dropped by 11.8 percent.

Sales in China, however, rose 3 percent year-on-year during the first quarter. The U.S. market had sales growth of 6.1 percent.

Kia Motors said it is facing challenging market conditions going forward and that intensifying competition in emerging markets may hurt its sales.

Last year was particularly tough for the two largest automakers.

Hyundai Motor, reported its worst operating profit in four years while Kia Motors’ operating profit sank under 3 trillion won in 2014 for the first time in four years.

Kia said it made 2.57 trillion won in operating profit last year, a 29 percent drop from 2013, adding that it had revenue of 47.97 trillion won on sales of slightly more than 3.04 million cars. It was Kia’s first operating profit of less than 3 trillion won since it made 2.49 trillion won in 2010. Net profit also declined 21.6 percent year-on-year in 2014, from 3.81 trillion won to 2.99 trillion won.

“Although the second quarter will present different challenges to the company, we try to stay competitive by focusing on improving product quality,” said a representative of Kia Motors.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]