Samsung Q1 profit jumps 46% on rebound in chip, phone sales

Samsung will pay a dividend of 7,000 won, the first time it has made a quarterly payout.
Samsung will pay a dividend of 7,000 won, the first time it has made a quarterly payout.PHOTO: AFP

SEOUL (BLOOMBERG, REUTERS) - Samsung Electronics posted profit that topped analysts' expectations on a memory chip boom and a rebound in smartphone sales, signaling the South Korean company may be on track to its best year ever.

Net income rose to 7.49 trillion won (S$9.25 billion) in the first quarter as a shortage of chips drove up prices, the company said Thursday (April 17) in a filing. That compares with the 6.77 trillion won average of estimates compiled by Bloomberg. It was the company's biggest quarterly profit since 2013.

Samsung will pay a dividend of 7,000 won, the first time it has made a quarterly payout.

Samsung's chip business remained the firm's top earner with a record 6.3 trillion won operating profit, buoyed by price gains for both DRAM and NAND memory chips as supply growth constraints and demand for more firepower on devices such as smartphones and servers boosted margins.

Samsung also regained the global lead in smartphones during the quarter while its component divisions benefit from demand for premium chips and displays in the marquee Galaxy S8 released this month. That's helped the company recover from last year's Note7 debacle and the ongoing trial of Vice Chairman Jay Y Lee, who has been detained since February over his alleged role in a corruption scandal that led to the ouster of President Park Geun-hye.

"For long-term investors, all this means they have an excuse to hold on to their shares for longer terms," Won Jong-jun, Chief Executive Officer at Lime Asset Management, said. "Greater profit for Samsung means the company could afford greater dividends for shareholders than have been announced already."

Operating profit for the quarter was 9.9 trillion won the company said, confirming preliminary numbers released earlier this month.

Samsung shares posted a record close of 2.14 million won on Wednesday, according to data compiled by Bloomberg.

The company unveiled the S8 in March with first deliveries of its most expensive handset starting this month. Pre-orders of the device, and the larger S8+, beat the record of the previous model in the high-end Galaxy range.

After being overtaken by Apple in the fourth quarter of 2016 when Samsung pulled its Note7 from shelves because the phones tended to catch fire, the Korean company reclaimed the global top spot with 26 per cent of shipments in the three months ended March, according to market researcher TrendForce.

While Apple is expected to unveil a new iPhone later in 2017 - the 10th anniversary of the iconic device - it's said to be adopting a display using organic light-emitting diodes that is made by Samsung.

Operating income from Samsung's chips unit was 6.31 trillion won while the display business had earnings of 1.3 trillion won. The consumer electronics unit, which includes TVs and appliances, had profit of 380 billion won.