Samsung will likely see Q1 profit drop, analysts say

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Samsung will likely see Q1 profit drop, analysts say

Operating profit at Samsung Electronics will likely fall slightly in the first quarter this year from 15.1 trillion won ($14.1 billion) in the previous quarter due to falling demand and prices for displays and consumer electronics, as well as the appreciation of the Korean won, analysts said Thursday.

The Korean tech giant posted a record 15.15 trillion won in operating profit in the fourth quarter last year on sales of 65.9 trillion won.

For all of 2017, sales and operating profit came to 239.5 trillion won and 53.65 trillion won, respectively, up 18.6 percent and 83.4 percent from a year earlier.

“We expect the operating profit to fall 4.8 percent to 14.4 trillion won during the January-March period of this year from the previous quarter,” Kim Woon-ho of IBK Investment & Securities said. “The operating profit will fall off sharply due to the display sector.”

Sales of Apple’s iPhone X have failed to meet market expectations, which is not good since Samsung has been providing panels to Apple.

Eo Kyu-jin of eBEST Investment and Securities also estimated first-quarter operating profit at 14.5 trillion on 60.6 trillion won in sales, predicting a sharp decline in sales in the display sector.

The analyst, however, said Samsung Electronics will post an increase in operating profit in the semiconductor sector buttressed by rising prices for dynamic random access memory chips.

The smartphone sector may post a 21.4 percent increase in operating profit for the January-March period this year from a quarter earlier, he said, noting good demand for the company’s Galaxy S9 and Galaxy S9 Plus smartphones.

Kim Dong-won of KB Securities forecasted that Samsung will continue to suffer from sluggish sales in the display sector toward the second quarter of this year but added that sales of Samsung’s flexible OLED panels will begin rising in the third quarter this year when Apple is expected to begin production of its new smartphones.

Kim put the company’s second-quarter operating profit at 15.5 trillion won, adding that the company’s share price has already taken in the falling display performance in consideration.

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