Samsung Electronics

Galaxy sales help push Samsung to quarterly profit record

PUBLISHED : Friday, 26 April, 2013, 10:11am
UPDATED : Saturday, 27 April, 2013, 2:42am

Samsung has posted a record quarterly profit as surging sales of Galaxy handsets helped Asia's biggest technology company overcome sluggish demand for its televisions.

Net income climbed more than 40 per cent to 7.15 trillion won (HK49.8 billion) in the three months to the end of March, from 5.05 trillion won a year earlier, the South Korean company said yesterday. Sales rose 17 per cent to 52.9 trillion won from 45.3 trillion won.

Demand for Samsung's high-end smartphones, including the flagship Galaxy S4 set for release today, and cheaper feature phones targeted at emerging markets are stoking sales in the US$358 billion market for handsets. Shipments that may be double those of Apple's iPhone are pushing growth in telecommunications, already Samsung's biggest profit driver, and limiting the impact of stalling global demand for televisions.

Heo Pil-seok, chief executive of Midas International Asset Management in Seoul, said: "The numbers are really impressive. Samsung will deliver even stronger earnings in coming quarters, which makes me believe profit for the year will exceed that of Apple."

Investors may not buy on yesterday's news, however, as the company had already reported its preliminary operating profit on April 5, Heo said.

Operating income rose year on year by 54 per cent to 8.78 trillion won from 5.69 trillion won, Samsung said.

The S4, with a five-inch screen, a 13-megapixel camera and motion-detecting software, was scheduled to go on sale yesterday in South Korea before being released globally.

The device, one of three high-end handsets being released by Samsung this year, is part of the company's plan to win back the top spot in smartphone sales in the US, where it was overtaken by Apple in the last quarter of 2012.

Samsung said on Thursday that demand for the device was stronger than expected after US wireless carriers T-Mobile and Sprint Nextel pushed back their release dates, blaming shipment delays.

Doh Hyun-woo, an analyst at Mirae Asset Securities, said: "The Galaxy S4 will be the biggest contributor to the company's overall profit but will also be the biggest risk factor, The real battle starts from the third quarter, when many lower-end smartphones will be on the market and eating into margins. The mobile business may peak in the third or fourth quarter."