Samsung beats estimates with Q1 profits

Samsung Electronics posted profit that beat analysts' estimates as rising demand for memory chips and displays more than offset a slump in smartphones. Operating income fell 31 per cent to 5.9 trillion won ($5.4 billion) in the three months ended March, the Suwon, South Korea-based company said in a filing Tuesday.

Selling components to other vendors is helping Samsung weather a slide in the global smartphone market, where Apple’s new iPhones and inexpensive devices from Xiaomi are winning customers.

With earnings falling for six straight quarters, the company is counting on Friday’s debut of its new Galaxy S6 models to lure back buyers and drive sales of chips and displays.

“Robust sales of memory chips for mobile devices and servers contributed to the stronger-than-expected profit,” said Greg Roh, a Seoul-based analyst at HMC Investment Securities Co. “Tighter marketing spending at mobile also contributed to the higher result and second-quarter results will be a lot higher, largely helped by S6 smartphones.”

Sales declined to 47 trillion won in the quarter, the company said today. The company’s shares fell 0.5 per cent to 1,462,000 won in Seoul today, paring this year’s gain to 10 per cent.

Samsung didn’t provide net income or details of divisional earnings. Audited results are scheduled for later this month.

Smartphone sales

Operating income at the mobile unit probably fell to 2.3 trillion won on sales of 27.1 trillion won, according to the median estimate of five analysts surveyed by Bloomberg News.

Samsung probably shipped 81 million smartphones worldwide in the first three months of 2015, rising 7 per cent from the fourth quarter, Daewoo Securities said in a March 27 report.

Despite slower sales of premium smartphones, demand for cheaper Galaxy models combined with reduced marketing expenses during the quarter probably helped slow the unit’s slide.

Samsung added $11 billion of market value in March after unveiling the Galaxy S6 and S6 Edge, with a multisided screen, at the start of the month. The new phones will be released initially in 20 countries from April 10th.

Bloomberg