Samsung Hopes Galaxy S5 And ‘World Cup Effect’ On TV Sales Will Boost Q2 Profits
Samsung sees 4 percent slide in Q1 mobile revenue, but predicts things will bounce back
Samsung reported a four percent drop in mobile revenue during the first quarter of 2014, but says sales of the Samsung Galaxy S5, which was released earlier this month, should turn things around in the second quarter.
The Korean manufacturer’s mobile division generated 33.4 trillion Won (£19.3bn) in revenue during the period leading up to 31 March, but operating profits actually increased by 18 percent to 6.43 trillion won (£3.7bn) thanks to steady smartphone shipments, marketing efficiencies and one off adjustments, despite traditionally weak demand for this time of year.
Samsung Galaxy S5 boost
It expects strong demand for the Samsung Galaxy S5 to boost figures over the next three months however, and anticipates sales of its new flagship smartphone will surpass those of its predecessor, the Samsung Galaxy S4.
The company also plans to take advantage of continued demand for LTE in China and the growing market for wearable technology, as well as expand its Knox enterprise mobile management platform in an effort to offset growing fears of smartphone saturation in developed markets.
Indeed, the boost from the Samsung Galaxy S5 could not come at a better time for Samsung, which saw its share of the global smartphone market shrink for the first time in four years, although it remains the largest manufacturer.
World Cup effect
Overall, the company generated 53.68 trillion won (£31bn) in revenue for the first quarter, a nine percent decrease that was again attributed to weak seasonality, but net profits increased by 270 billion won to 7.57 trillion won (£4.4bn).
Samsung says profits should increase across the entire company during the second quarter due to increased demand for its semiconductor products in servers and graphic solutions and a “World Cup effect” increasing sales of flat screen televisions from football fans.
“We expect our overall earnings to improve starting from the second quarter, driven by improvements in the Display Panel segment and the Consumer Electronics division in conjunction with steady growth momentum in mobile and memory businesses,” explains Robert Yi, senior vice president and head of investor relations at Samsung.
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