Chips, smartphones bring Samsung largest-ever Q1 operating profit

South Korean tech giant Samsung Electronics said Thursday it achieved record-high operating profit for the first quarter of 2018 due to robust sales of memory chips and smartphones.

According to the earnings announcement, Samsung posted 60.56 trillion won ($56.98 billion) in consolidated revenue and 15.64 trillion won in operating profit for the first three months of the year.

Its first-quarter revenue grew nearly 20 percent year-on-year, while operating profit for the quarter was a record high. The operating margin in the first quarter was 25.8 percent, up 6.2 percentage points from a year earlier. 

The growth in revenue was mainly led by the memory chip business and increased sales of flagship mobile products, including the Galaxy S9, Samsung said.

By business division, the company’s semiconductor businesses achieved a total of 11.55 trillion won in operating profit on consolidated revenue of 20.78 trillion won.

The memory business recorded strong earnings despite weak seasonality due to high demand for high-end servers and graphics products, the company said.

The system LSI and foundry businesses also contributed to first-quarter earnings, backed by strong demand for chips used for smartphones and cryptocurrency mining.

Samsung’s IT and mobile communications division recorded 28.45 trillion won in consolidated revenue and 3.77 trillion won in operating profit for the quarter.

While overall market demand for smartphones and tablets declined during weak seasonality, its smartphone shipments increased compared to the fourth quarter due to the early release of the Galaxy S9 and S9+ smartphones as well as solid sales of the Galaxy S8 models, the company said.

The consumer electronics division saw quarter-on-quarter declines in both revenue and operating profit for the January-March period due to seasonally slow demand following the year-end holiday period.

Its first-quarter operating profit fell from about 510 billion won to 280 billion won on consolidated revenue of 9.74 trillion won.

The company noted TV earnings were also slightly down year-on-year, due to ongoing restructuring of the sales mix with a focus on the premium lineup, including QLED and UHD TV models.

Samsung’s digital appliances business saw moderate growth in the first quarter due to increased demand in overseas markets for premium products such as FlexWash washing machines, Cube air purifiers and system air conditioners.

However, the appliances business’ earnings decreased from a year earlier due to increases in the prices of raw materials and operating costs of the company’s new washing machine factory in the US, it said.

By Song Su-hyun  (song@heraldcorp.com)