Business / Corporate Reports

Samsung's lackluster Q1 earnings meet expectations

(Xinhua) Updated: 2014-04-08 11:21

SEOUL-- Samsung Electronics, the world's largest maker of smartphones, memory chips and flat screen, saw its first-quarter earnings reduce on faltering display panel businesses, but the result managed to meet market expectations on the back of brisk smartphone sales, a regulatory filing showed Tuesday.

Samsung's preliminary first-quarter operating profit was estimated at 8.4 trillion won (around $8 billion), according to the regulatory filing.

It was up 1.08 percent from three months earlier, but the figure was down 4.33 percent from the same period of last year. The operating profit stayed in the 8-trillion-won level for two straight quarters.

The South Korean company's operating profit reached a new record high of 10.16 trillion won in the third quarter of last year, but it tumbled to 8.31 trillion won the next quarter, causing an "earning shock" for the tech behemoth.

Sales were estimated at 53 trillion won in the three months ending March 31. It was down 10.59 percent from the prior quarter, but was slightly up 0.25 percent from a year earlier.

The company did not unveil its estimates for net profit and a breakdown of each business. The final results will be announced later this month following an external audit.

The lackluster first-quarter earnings came as Samsung's display panel unit continued its underperformance due to inventory adjustment. The consumer electronics unit was also believed to have troubles in the first quarter due to seasonally weak demand. The first-quarter revenue missed market consensus of 54.68 trillion won.

The first-quarter figure, however, managed to meet analysts' expectations of 8.46 trillion won in operating profit due to robust smartphone sales. Samsung's smartphone sales were estimated to rise 2 percent from three months earlier to 90 million units, according to Peter Lee, a Seoul-based analyst at Woori Investment and Securities.

Samsung shares moved in negative territory following the first- quarter earnings result. Samsung, which accounts for more than 20 percent of the total market capitalization, declined more than 1 percent in the morning session.

Outlook for Samsung's second-quarter earnings were roughly bright as tech analysts expected the company's new flagship smartphone to be sold well during the April-June period.

"The launch of Galaxy S5 will improve Samsung's second-quarter earnings. Tablet PC sales will become stronger in the quarter," said Peter Lee at the Woori Investment & Securities.

The latest version of Samsung's Galaxy smartphone series had no outstanding differences, in specifications such as DRAM and NAND chips and display panels, from the Galaxy S4, but the price was more than 30 percent lower than the previous version, said Lee.

The analyst forecast that the display panel unit will see its earnings recover at a gradual pace from the second quarter of this year.