Samsung posts falling profits for second straight quarter

Samsung Electronics on Tuesday posted estimated first quarter operating profits of 8.4 trillion won (S$10 billion), marking a second straight year-on-year decline as growth in smartphone sales slow. -- FILE PHOTO: AFP
Samsung Electronics on Tuesday posted estimated first quarter operating profits of 8.4 trillion won (S$10 billion), marking a second straight year-on-year decline as growth in smartphone sales slow. -- FILE PHOTO: AFP

SEOUL (AFP) - Samsung Electronics on Tuesday posted estimated first quarter operating profits of 8.4 trillion won (S$10 billion), marking a second straight year-on-year decline as growth in smartphone sales slow.

The estimate was in line with market expectations, with analysts having forecast that operating profit for the world's largest mobile phone maker would be somewhere between 8.14 and 8.63 trillion won for the January-March period.

"The operating profits fell for two straight quarters year-on-year as profit margins in smart phones were falling and the growth rate in smartphone sales was decreasing due to growing competition," analyst Young Park of Hyundai Securities told AFP.

The figure was down 4.3 per cent from the first quarter of 2013, when the South Korean giant recorded operating profits of 8.78 trillion won.

But compared with the previous quarter, it marked a 1.08 per cent increase.

In January Samsung had posted a operating profits of 8.3 trillion won for the last quarter of 2013 - a 6.0 per cent decline on the previous year - due to a one-off bonus, a strong won and slowing smartphone sales.

First-quarter sales were estimated at 53 trillion won, up 0.24 per cent from the 52.87 trillion won a year earlier.

Profits for the company's IT and mobile operations grew to 6.2 trillion won, up from 5.5 trillion won the previous quarter, Park said.

Earnings for the mobile division improved, following the earlier-than-expected release of its latest smartphone in South Korea, analysts said.

The Galaxy S5 - which Samsung hopes will cement its lead in the global smartphone market - came out at home on March 27, two weeks earlier than the global launch slated for April 11.

But the company's television division fell into the red due to falling global prices.

Operating profits for the company's semiconductor division were estimated to be about the same level as the September-December period at two trillion won, Park said.

For the whole of 2014, Samsung's operating profit is likely to be around 37 trillion won, about the same as last year's, he added.

But Greg Roh of HMC Investment Securities said Samsung's overall 2014 operating profit was likely to fall to 35 trillion won because of the slowing demand for smartphones.

Samsung plans to announce its fixed first-quarter earnings later this month.