Samsung Electronics beats forecast
Samsung Electronics reported better-than-expected first quarter results as its chip business was steady and phones profitable.
The company warned of tougher times ahead as demand for electronic devices will likely take a further hit in the second quarter from the coronavirus.
Its operating profit rose 3.43 percent to 6.45 trillion won ($5.3 billion) during the January-March period compared to the same period last year.
The figure beat the 6.1 trillion won analyst consensus compiled by FnGuide.
Revenue advanced 5.6 percent to 55.3 trillion won.
Most profit was in the semiconductor business, which generated 3.99 trillion won in operating profit, down 3.2 percent compared to the same period last year. When compared to the previous quarter, the first quarter result is 15.7 percent higher since the prices of memory chips hit the bottom in the final three months last year.
Demand for chips for servers and PCs was robust because so many people worked from home, took online classes and increased digital content consumption due to the coronavirus.
“Earnings from the memory chip business improved as demand was solid mainly from servers and PCs, while demand from mobile remained steady,” the company said in a statement.
The IT and mobile communications division, which handles smartphones, generated 2.65 trillion won in profit, up 16.7 percent compared to the previous year, helped by the sales of new premium phones such as the Galaxy Z Flip.
Revenue dropped 4.4 percent to 26 trillion won as the sales volume of smartphones decreased.
“Due to the impact of Covid-19, overall market demand fell significantly quarter-on-quarter and the company’s smartphone shipments also declined in the first quarter,” it said, but added that the increased average selling price of flagship smartphones and higher-than-expected sales of the Galaxy S20 Ultra and Galaxy Z Flip drove profitability.
Samsung’s display business reported a 560 billion won loss, compared to 220 billion won of profit in the first quarter last year.
The consumer electronics division posted weaker profit, at 450 billion won on 10.3 trillion won in revenue, due to lower income from TV sales in the wake of the coronavirus.
In assessing the prospects for the next quarter, Samsung acknowledged that it is on track to face worse conditions, saying that the pandemic “will significantly impact demand for several of its core products.”
LG Electronics also beat market expectations as its operating profit jumped 21.1 percent to 1.09 trillion won in the first quarter.
This is the third time in history the company’s quarterly operating profit broke 1 trillion won.
Its revenue contracted 1.3 percent to 14.7 trillion won.
The home appliance segment recorded an all-time-high quarterly profit of 753.5 billion won, up 13.9 percent on year, boosted by strong sales of air purifiers, clothes dryers and wireless vacuum cleaners. Consumers concerned about air quality during the outbreak boosted demand.
BY PARK EUN-JEE [email@example.com]
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