Samsung Electronics on Thursday announced better-than-expected first-quarter earnings thanks to an early release of its high-end Galaxy smartphones that gained great popularity worldwide.
Operating profit was 6.6 trillion won (5.7 billion U.S. dollars) during the January-March period, up 10.37 percent from the same period of last year, the company said in a statement for preliminary earnings results. The revised figure will be announced later this month after auditing and approval by board of directors.
The first-quarter profit beat a market consensus of about 5.6 trillion won. Market expectations for Samsung profit had been recently revised up from 5.2 trillion won.
The better-than-expected earnings came as Samsung released Galaxy S7 smartphones in March, around a month earlier than last year's debut of S6 smartphones.
No delay was found in production of curved displays for S7 Edge this year. Delayed production last year of wrap-around screens for its previous version helped cause a sales slowdown.
Global sales of Galaxy S7 smartphones are reportedly estimated to have surpassed 10 million units since its debut on March 11, more than triple those of the S6-version phones during the first month.
Preliminary figure for revenue was estimated at 49 trillion won in the first quarter, up 3.99 percent from a year earlier. The preliminary figures don't include net income and breakdown on earnings of each division.
The first-quarter revenue, however, was down 8.10 percent from the previous quarter, missing market expectations of at least 50 trillion won. It led to pessimistic views over whether Samsung can maintain a trend of improved earnings in the next quarter.
The mobile phone business, on which Samsung heavily depends for most of its revenue, has slumped amid the industry-wide downturn in the saturated market. Competition became fiercer due to challenges from Chinese rivals such as Huawei Technologies and Xiaomi Corp.
Samsung's archrival Apple is expected to release its new iPhone series in the second half, raising possibility for Samsung's fall in smartphone sales later this year.
Apple's cheaper model iPhone SE will go on sale in the second quarter, which is expected to do damage to Samsung's low-end smartphone sales such as the A and J series.
Meanwhile, the better-than-expected operating profit for Samsung was partly attributable to the foreign exchange market effect during the first quarter when South Korea's currency depreciated versus the U.S. dollar.
The won/dollar exchange rate jumped from 1,172.5 per dollar at the beginning of this year to 1,241 won on late February. It fell again to 1,140.5 won on March 31.
The upward trend for the first two months of this year may have helped Samsung boost its operating profit, a temporary effect that can disappear at any time according to the foreign exchange market moves.
Samsung's operating profit at its mobile unit was estimated at about 3.5 trillion won in the first quarter, which would be the first mark above 3 trillion won in seven quarters.
The semiconductor business, however, was estimated to have seen a fall in its first-quarter operating profit due to falling chip prices, while the display panel unit was estimated to have posted an operating loss. Endit
Source: Roundup: Samsung's Q1 earnings beat estimates on early release of S7 smartphones
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