Samsung confident of whopping rise in profit


Next attraction: Profit is set to surge when the Galaxy S4 smartphone goes on sale this month. Samsung, the world’s largest technology firm by revenue, was giving earnings guidance before official results are made available later this month. Photo - Bloomberg News

Seoul: South Korea's Samsung Electronics said yesterday it expected a sharp increase in first-quarter operating profit to 8.7 trillion won ($7.7 billion), up 52.9 per cent from the first three months of 2012.

Samsung, the world's largest technology firm by revenue, was giving earnings guidance before official results are made available later this month.

The January-March operating estimate comes after a record quarterly operating profit of 8.8 trillion in the fourth quarter of last year. Samsung profits soared in 2012, largely on the back of sales in the lucrative smartphone market.

Sales in the first quarter of 2013 were expected to reach 52 trillion won, up 14.9 per cent from a year earlier, but down 7.2 per cent from the previous quarter.

While Samsung overtook Nokia as the world's largest mobile-phone maker and Apple in smartphones last year, Apple was twice as profitable as Samsung in terms of gross profit margin, analysts say.

Bulk of profits
Mobile devices generate the bulk of profits at both companies. Analysts say an increased presence in the high-end market will be crucial for Samsung in maintaining margins for its mobile business amid stiff competition.

"Samsung still lags behind Apple in the high-end market," which is where the money is, Lee Sun-Tae, a Seoul-based analyst with NH Investment and Securities told Dow Jones Newswires.

Samsung Electronics is estimated to have sold 25 million smartphones each month this year, which puts its quarterly sales at over 70 million units, according to Hong Kong-based market researcher Counterpoint Research.

The South Korean firm continued to dominate the global smartphone market in terms of market share, with its stake in the first two months of the year standing at 35 per cent, compared to 32 per cent in the fourth quarter of 2012, Counterpoint said.

Samsung unveiled the fourth series of its Galaxy smartphone line-up at a New York launch event in March and is set to roll out the device starting this month.

The Android-based handset comes with a 5-inch (12.7-cm) screen, a faster chip and is thinner and lighter than the previous Galaxy S III model

Second-quarter profit
Profit is set to surge when the Galaxy S4 smartphone goes on sale this month.  "Second-quarter profit looks even better than the first, as the Galaxy S4 will have a great impact," said Chung Chang Won, a Seoul-based analyst at Nomura Holdings. "Samsung's shipments of its flagship smartphone will outpace that of the iPhone sometime in the second or third quarter."

Operating profit for the quarter ended March 31 almost matched the record 8.84 billion won for the preceding quarter that included the year-end holiday season. Analysts estimate the current quarter could reach 9.3 trillion won as Samsung releases the S4 in the US on April 26 and tries to reclaim the top spot in sales from Apple. Samsung, is scheduled to release audited results later this month.

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