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Samsung Electronics enjoys 44% jump in Q1 operating profit

Samsung headquarters in Seoul / Korea Times file
Samsung headquarters in Seoul / Korea Times file

By Kim Hyun-bin

Samsung Electronics said Wednesday that it recorded an estimated 9.3 trillion won ($8.3 billion) in operating profit in the first quarter, up 44.2 percent from a year ago, on the back of solid sales of smartphones following the release of its flagship Galaxy S21 series.

In a preliminary earnings report, the electronics giant estimated total sales to have jumped 17.5 percent to 65 trillion won in the first three months of 2021 on a year-on-year basis.

The company said the first quarter performance came close to its record sales of 66.96 trillion won for the third quarter of last year, but was still its highest first quarter outing to date.

Samsung did not specify details, which the company said will be revealed its official earnings report scheduled for release later this month.

The preliminary earnings beat estimates, with analysts predicting lower earnings due to the month-long shutdown of Samsung's semiconductor plant in Austin, Texas, caused by a severe winter storm last month. Stronger sales in the mobile and consumer electronics sector beat the analysts' predictions for an earnings surprise.

Many analysts say the stronger sales of Galaxy smartphones were behind the first quarter earnings performance.

The tech giant introduced the new Galaxy S line up in mid-February, following the S21 in January, with lower pricing which helped boost sales. The company also held a global launching ceremony for the first time for its Galaxy A budget phone series.

Samsung's consumer electronics sector also contributed to the strong earnings with some experts expecting over 1 trillion won in operating profits over the same period.

Observers predict Samsung will have recorded double-digit growth in TV shipments as well as a continuous increase in sales of premium home appliances in the first quarter due to the COVID-19 pandemic that forced more families to stay home.

The display panel business is also anticipated to have logged an operating profit of around 500 billion won from increased OLED sales.

Industry watchers believe Samsung's profits will further increase with the recovery in the semiconductor sector as well as more countries rolling out COVID-19 vaccinations.

"Market demand rebounded late in the first quarter, which helped the performance beat market expectations. Strong sales in memory chips and the Galaxy S21 series as well as pent-up demand for consumer goods contributed to the figures," said Roh Greg, research head at Hyundai Motor Securities. "For the second quarter, due to a shortage of chips, smartphone sales are predicted to drop but the losses will be covered by strong semiconductor sales. The firm is expected to record higher earnings than in the first quarter with over 10 trillion won in profit."

A rise in DRAM and NAND prices will also propel Samsung's chip unit making up for the expected decline in the mobile phone business in the second quarter.

Market researcher TrendForce projected that NAND flash prices are expected to increase by an average of 3 percent to 8 percent in the second quarter from the first, while DRAM prices are also expected to rise 13 percent to 18 percent.


Kim Hyun-bin hyunbin@koreatimes.co.kr


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