Samsung Smartphone Sales Boost Record Q1 Profits

Strong sales of Samsung smartphones have contributed to first quarter profits of 8.78 trillion (£5.2bn) won for the Korean manufacturer ahead of the launch of its new flagship device, the Samsung Galaxy S4.

The company announced total revenues of 52.87 trillion won (£31bn) during the period ending March 2013, of which 31.77 trillion won (£18.5bn) came from the company’s mobile division.

Demand for products like the Samsung Galaxy S III and Samsung Galaxy Note II continued during the quarter, despite the traditional seasonal drop in sales, but Samsung has warned that it expects sales to remain flat in the second quarter, before picking up at the end of the year.

Words of caution

It says that competition will intensify as more mid-to-low mobile devices will enter the market and new premium products are rolled out, but that it intends to remain competitive with the launch of the Samsung Galaxy Note 8.0 and Galaxy S4.

“Although market uncertainties from the European crisis and the slow global economic recovery are still lingering, we expect to increase R&D spending for strengthening our competitiveness ahead of planned new product launches,” said Robert Yi, senior vice president and head of investor relations at Samsung.

“We may experience stiffer competition in the mobile business due to expansion of the mid- to low-end smartphone market while TV growth will continue to wane in developed markets.”

Component optimism

Demand for consumer electronics products in emerging markets helped offset sluggish sales of TV and home appliances, while weak PC sales also took their toll on Samsung.

However there is optimism within the company’s component businesses in 2013. The semiconductor division reported an 11 percent drop in revenues, but anticipates an increase in demand for NAND flash memory in smartphones and solid state drives in data centres, while the display panel business expects to reverse an 8 percent slide in sales as more tablet products are launched later this year.

Demand for 4G has strengthened Samsung’s network business as operators bought more LTE equipment.

Samsung’s results come after arch-rival Apple posted its first drop in profits in a decade, despite strong sales of iPhones and iPads.

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