Samsung Profit Rises In Q1 Amid Strong S7 Sales
Samsung has posted a 5.7 per cent year-on-year rise in revenue and a 12 per cent year-on-year rise in operating profit in the 2016 first quarter, with the tech giant noting the role of its flagship Galaxy S7 and S7 edge smartphones in overall earnings growth.
Samsung’s revenue for the quarter was 49.78 trillion won (around $57.4 billion), with operating profit coming in at 6.68 trillion won.
“The first quarter saw overall earnings growth led by the early launch and successful sales of the flagship Galaxy S7 and S7 edge, improved memory product mix, expanded 14nm supply of System LSI products and increased sales of OLED panels,” Samsung stated upon release of the results.
The Galaxy S7 and S7 edge launched in March, with Samsung stating that its IT & mobile communications division’s year-on-year earnings improvement was “mainly driven by the early launch of Galaxy S7”.
Operating profit for the division was 3.89 trillion won, up from 2.74 trillion won year-on-year.
“While smartphone and tablet demand saw a slight QoQ decrease due to seasonal effects, overall operating profit for the division increased,” Samsung stated.
“This increase was largely due to the early launch and strong global performance of the flagship Galaxy S7 and S7 edge, as evidenced by robust sell-out figures and low inventory levels compared to their predecessors. A streamlined mid-to-low-end smartphone line-up also contributed to improved profitability.
“Looking ahead to the second quarter, while demand for smartphones and tablets is forecast to remain flat due to continued weak seasonality, the worldwide rollout of the latest flagship models as well as an increase in shipments of the mid-to-low-end Galaxy A and J series are expected to help the company maintain robust sales momentum and profit.”
Samsung stated that it anticipates “softening demand in the smartphone market and negative growth in the tablet market” in the year ahead.
“The company will reinforce its leadership in the premium smartphone segment on the back of the Galaxy S7 and S7 edge, while continuing to increase volume and improve profitability in the mid-to-low-end segment,” Samsung stated.
“In addition, the company will continue to expand the Samsung Pay service to global markets and look into new business opportunities.”
In the other areas of its business, Samsung’s semiconductor business saw a drop in operating profit year-on-year, posting 2.63 trillion won, down from 2.93 trillion won, while its consumer electronics division posted operating profit of 0.51 trillion won, up from a loss of 0.14 trillion won.