Samsung posts $8.2B profit; second straight quarterly drop

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Samsung’s Galaxy S4.
Samsung

Samsung reported its second consecutive quarter of profit decline Monday on slackening demand for its high-end smartphones.

The South Korean electronics giant reported a first-quarter operating profit of 8.49 trillion Korean won ($8.2 billion) for the three months ended March 31, a 3.3 percent decline from the year-ago period. The financial results were slightly better than guidance provided by Samsung earlier this month, as well as analysts’ average prediction of an 8.4 trillion won operating profit.

The company recorded sales of 53.68 trillion won, a 3 percent increase year over year.

Samsung’s mobile division, which typically accounts for two-thirds of the company’s revenue, recorded a first-quarter operating profit of 6.43 trillion won ($6.2 billion), a slight decline from the 6.51 trillion won a year ago but a 17 percent increase over the 5.47 trillion won in the previous quarter.

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The company said it expects earnings to improve in the second quarter due to expected strong sales of the Galaxy S5, the Samsung flagship handset that went on sale earlier this month. Sales of the Galaxy S5 do not factor into the company’s first-quarter results.

“Samsung is expected to see profits rally in the second quarter and beyond, on the back of improved sales of display panels and home appliances,” Samsung said in a statement. “Orders for display panels that are used for premium smartphones and TVs are expected to increase, as new mobile devices are rolled out into the market and as consumers look forward to the upcoming World Cup in Brazil.”

Samsung’s previous flagship handset — the Galaxy S4 — wasn’t considered a major leap over its predecessor. While sales of the Galaxy S4 popped immediately, it struggled to maintain that momentum. The company hasn’t offered any sales targets for the Galaxy S5, but a Samsung executive told Reuters that the new handset is expected to fare “much better” than its predecessor.

Samsung’s earnings come out a week after Apple, its chief competitor in the smartphone market, revealed that it sold 43.7 million iPhones, much higher than the expected 38 million and a record for the March quarter. Sales of the iPhone helped the Cupertino, Calif., tech giant return to earnings growth — its highest rate in the past six quarters.

In recent quarters, profits from Samsung’s mobile division, which typically accounts for two-thirds of its revenue, have been buoyed by sales of cheaper handsets in emerging markets such as China, South America, and Eastern Europe.

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