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Samsung Electronics’operating profit up 50 percent in Q1

Samsung Electronics said Thursday it had posted 9.9 trillion won ($8.7 billion) in operating income in the first quarter, recording a nearly 50 percent on-year jump. The tech giant is forecast to post a record-breaking 12 trillion won in the next quarter due to strong sales of chips and smartphones, analysts said.

Samsung said it posted 50 trillion won in sales, a 1.5 percent on-year increase, in the first three months of the year. The operating profit was the largest since 10 trillion won marked in the third quarter of 2013.

“The strong earnings were driven by the strong prices of chips and rising sales of flexible OLED (organic light-emitting diode) displays. The earnings from Harman -- from March 11 when the deal was completed -- were also reflected in the quarterly earnings,” Samsung said. 
(Yonhap)
(Yonhap)

The chip unit posted a record-breaking 6.3 trillion won in operating profit and 15.5 trillion won in sales, both 40 percent gains year-on-year due to strong selling prices and growing demand for DRAM and NAND flash.

The display unit posted 1.3 trillion won in operating profits and 7.2 trillion won in sales. The smartphone business posted 2 trillion won in operating profits and 23.5 trillion won in sales, while consumer electronics posted 380 billion won in operating profits and 10.3 trillion won in sales.

Samsung said it invested a total of 9.8 trillion won in infrastructure -- 5 trillion won for chips and 4.2 trillion won for displays -- in the first quarter, adding that the future investment for the next quarter had not been confirmed.

The tech giant is predicted to post record-breaking profits in the second quarter driven by the rollout of the Galaxy S8 and the continued super-cycle of DRAM and NAND flash.

The company’s new flagship smartphone Galaxy S8 is predicted to sell at a similar level to the S7, which sold around 48 million units. Preorders for the Samsung Galaxy S8 and S8 Plus hit 1 million units in Korea

Samsung’s chip business is also expected to continue to see favorable market conditions on growing demand for high-end digital devices and self-driving cars. 

Kim Dong-won, an analyst at KB Securities, said, “Samsung’s operating profit in the second quarter is expected to be around 12.5 trillion won, a 54 percent rise year-on-year. The shipment of Galaxy S8 is expected to be around 46 million units.”

HMC Investment and Securities predicted 12.6 trillion won in operating profits in the second quarter, Hanwha Investment & Securities estimated 13.6 trillion won and Mirae Asset Daewoo Securities forecast 11.7 trillion won.

By Shin Ji-hye (shinjh@heraldcorp.com)
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