Samsung'south 1Q Profit Beats Estimates on Galaxy Sales Boost

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Source:   —  April 07, 2016, at 5:28 AM

The S Korean tech juggernaut keep its January-March operating profit at six.6 trillion won ($5.7 billion) in its earnings preview. That represents a ten % gain from 6 trillion won a year earlier.

Samsung Electronics reported Thursday a better-than-expected operating profit for the first quarter likely driven by powerful sales of its flagship Galaxy S7 smartphones that made an early global debut at cheaper prices.

The S Korean tech juggernaut keep its January-March operating profit at six.6 trillion won ($five.seven billion) in its earnings preview. That represents a ten % gain from 6 trillion won a year earlier.

Analysts surveyed by FactSet, a financial data provider, forecast a figure of 5.5 trillion won.

Sales rose four % over a year earlier to forty-nine trillion won in line with expectations.

Samsung didn't disclose net profit or breakdown figures among its business divisions.

Analysts expected that at minimum about half of the operating profit came from its mobile division, which would label the mobile team'south best quarterly result in nearly two years.

Samsung'south earnings suffered from a huge decline since mid-2014 as premium handset sales slowed and its share in China'south mobile phone market sank due to the rise of local players. Earnings improved in late two thousand fifteen but that was largely thanks to the performance of its semiconductor division.

But with the Galaxy S7 smartphone, the company was able to counter the downturn in the premium smartphone sales and look a revival in its mobile phone profit, analyst said.

Sales of its flagship Galaxy S7 smartphones were likely much better than expected amid the absence of new devices from major competitors. Analysts revised their first-quarter sales forecasts for the Galaxy S7 smartphones sharply higher to about ten million units from 5 million to 7 million units.

"Its initial sale was at minimum 1.5 times better than the Galaxy S6," said Greg Roh, an analyst at HMC Investment Securities.

Samsung launched globally the latest iteration of its flagship smartphone on March eleven, about a mo earlier than it launched its new flagship phone last year.

Samsung'south pricing strategy also helped boost phone sales. Even though the Galaxy S7 features an upgraded camera, an expandable storage space and a water resistant function, the price was cheaper than its earlier version. The Galaxy S7 Edge, which features curved displays that wrap around the corner, was also cheaper than its previous version. Samsung also resolved the output issues that slowed the production of the curved screens last year.

The company was able to slice costs in phone components and reduce the no of cheap phone models, analysts said.

Samsung will disclose its full earnings figures later this month.

———

This legend was revised to exact that operating profit represents a ten % gain from a year earlier, not 7.5 percent gain.

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