Samsung expects record profit in first quarter

Mr Justin Denison, senior vice-president of product strategy at Samsung, explaining the new features of the Samsung Galaxy S8 during a launch event for the smartphone in New York City last month.
Mr Justin Denison, senior vice-president of product strategy at Samsung, explaining the new features of the Samsung Galaxy S8 during a launch event for the smartphone in New York City last month.PHOTO: AGENCE FRANCE-PRESSE

SEOUL • Samsung Electronics forecast its best quarterly profit in more than three years in the January-March period, beating expectations and putting it on track for record annual earnings on the back of a memory-chip super-cycle.

The company has rapidly recovered from last year's costly failure of its fire-prone Galaxy Note7 device, despite a political scandal involving vice-chairman Lee Jae Yong, who faces charges including bribing ousted president Park Geun Hye.

The global memory-chip leader said first-quarter operating profit was likely 9.9 trillion won (S$12.2 billion), compared with an average forecast of 9.4 trillion won from a Thomson Reuters survey. Revenue rose 0.4 per cent to 50 trillion won, just ahead of analysts' forecasts.

"The semiconductor business was likely the main driver for earnings," said Heungkuk Securities analyst Lee Min Hee, adding that sales of mid- to low-tier smartphones also helped the mobile business to stay profitable. Samsung shares reached a record high of 2.1 million won last month on expectations of record annual profit this year.

Investors and analysts expect Samsung to report its best quarterly profit in April-June, with the Galaxy S8 smartphone hitting the market on April 21 in Samsung's first premium device launch since the Note7's withdrawal in October.

Some researchers forecast the S8, which sports the largest screens for Samsung high-end smartphones to date, would set a new first-year sales record.

"Samsung will look to recover the market share they lost last year and pump up volumes even if they have to spend more to do so," IBK Asset Management fund manager Kim Hyun Su said.

While Samsung will not provide detailed earnings results until the end of the month, analysts tipped its chip division to earn a record 5.8 trillion won in January-March and propel the firm to its best overall operating profit since the third quarter of 2013. Samsung stock rose 14 per cent in January-March, its strongest gain since the first quarter of 2012.

REUTERS

A version of this article appeared in the print edition of The Straits Times on April 08, 2017, with the headline 'Samsung expects record profit in first quarter'. Print Edition | Subscribe