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(4th LD) Samsung Q1 net up 13.55 pct on strong Galaxy S7 sales

All News 15:17 April 28, 2016

(ATTN: UPDATES closing share price)
By Kang Yoon-seung

SEOUL, April 28 (Yonhap) -- South Korean top tech giant Samsung Electronics Co. said Thursday its net profit advanced 13.55 percent on-year in the first quarter, apparently helped by robust sales of its flagship smartphones.

Net income came to 5.25 trillion won (US$4.56 billion) in the January-March period, compared with 4.62 trillion won from a year earlier, Samsung said in its regulatory filing.

Sales gained 5.65 percent on-year to 49.7 trillion won in the first quarter, and its operating profit moved up 11.65 percent to 6.67 trillion won. The finalized results were almost in line with the earnings guidance released earlier this month.

Samsung said the IT and mobile communications business, which covers smartphones, posted an operating profit of 3.89 trillion won, up 42 percent from a year earlier.

It marked the first time in nearly two years for the IT and mobile business to post an operating profit above 3 trillion won.

In the third quarter of 2014, the division posted an operating profit of 1.75 trillion won. Throughout 2015, the operating profit hovered around the 2 trillion-won level.

It said the performance was attributed mainly to the strong sales of the Galaxy S7 series, which went on sale in March.

The company said it sold 92 million units of handsets in the first quarter, along with 6 million units of tablet PCs. Smartphones accounted for 80 percent of the amount.

In the first quarter of 2015, Samsung said it sold 99 million units of handsets.

Samsung added the division's profitability also improved as it streamlined budget smartphone models.

Samsung has been suffering from sluggish performances of its mobile division, in the face of challenges especially from Chinese players that have eaten into some of its shares.

The company said the Galaxy S7 is gaining popularity around the globe, including in North America and Europe, adding shipments are better than they were for its predecessor.

The Galaxy S7 and Galaxy S7 Edge smartphones, first showcased at a trade fair in Spain in February, come with improved batteries, and are water and dust resistant. The company also brought back the micro SD card slot that had disappeared in the Galaxy S6 series.

The company's chip business, which had emerged as the new main source of profit last year amid poor smartphone sales, posted an operating profit of 2.63 trillion won, down 10 percent from the 2.93 trillion won posted a year earlier.

The consumer electronics business posted an operating profit of 510 billion won, improving from the operating loss of 140 billion won posted last year.

The display sector, however, experienced an operating loss of 270 billion won, compared with the profit of 520 billion won posted a year earlier.

The company added it is presumed to have enjoyed gains from foreign-exchange fluctuations estimated at 400 billion won, as the Korean won traded weaker against major currencies.

The company rolled out 4.6 trillion won worth of facility investments in the January-March period, with 2.1 trillion won being allocated for the chip business.

Samsung said the combined facility investment for 2016 may slightly rise on-year, although no plan has been made yet.

The company said it may expand investment in organic light-emitting diode display panels amid increasing global demand. The investment for dynamic random access memory (DRAM), however, is expected to edge down from a year earlier, it added.

Samsung Electronics added it will buy back 2 trillion won worth of shares over the next three months. The plan includes buying 1.3 million shares and 320,000 preferred shares.

The move came in line with the plan announced in October last year, when Samsung said it will scoop up 11.3 trillion won worth of shares. Samsung said it will complete the plan by the fourth quarter.

Samsung Electronics Co. also suggested a rosy outlook over the second quarter of 2016, adding the sales of the Galaxy S7 series will remain strong.

The shipment of consumer electronics is also set to improve later this year on the 2016 Rio de Janeiro Summer Olympics.

As for the chip sector, Samsung said the demand for server and mobile DRAMs will remain strong in the second quarter, while the sales of system large scale integration products will also improve on the back of premium smartphones.

Shares of Samsung Electronics closed 2.69 percent lower on the main bourse on Thursday, when the KOSPI shed 0.72 percent. The latest report of its earnings was issued before the opening of the stock market Thursday.


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