Samsung's Galaxy S7 and Galaxy S7 Edge [Yonhap Photo]
By Park Sae-jin = swatchsjp@ajunews.com
Last year, Samsung's mobile division has seen sluggish sales due to competition with Apple in the high-end market and cheap Chinese products.
This year, Samsung's first-quarter net profit rose 13.5 percent on-year to 5.25 trillion won (4.5 US dollars), Samsung said in a conference call, attributing the gain to a better-than-expected performance in its IT and mobile segment. There were also unexpected foreign exchange gains.
Samsung's operating profit was up 11.6 percent in the January-March period to 6.67 trillion won on sales of 49.7 trillion won which rose 5.65 percent.
Its IT and mobile communications business posted an operating profit of 3.89 trillion won, up 42 percent from a year earlier, above market expectations. Samsung said the first-quarter gain was led by the Galaxy S7 series.
"We've added watertight features, better cameras, and improved UX (user experience) to Galaxy S7 and S7 Edge, leading to great sales," Lee Kyung-tae, vice president of the mobile communications business, said, adding Samsung would step up efforts to boost global sales of its flagship S7 and S7 Edge.
For a head start ahead of Apple, Samsung released the Galaxy S7 series in March a month before its original schedule, a timely move seen as the game changer.
"We're expecting better sales than Galaxy S6," Lee said, promising to seek better results in the second quarter by strengthening the brand power of flagship models.
Samsung's first-quarter earnings were relatively better than Apple's. The US company reported its worst business performance for 13 years in the first quarter, posting a 12.7 percent drop in sales mainly due to sluggish iPhone sales around the world. Apple's first-quarter sales fell to $ 50.6 billion from $58 billion a year earlier.
Samsung, however, said its chip business fell 10 percent on-year to 2.63 trillion won in the first quarter.
The company's facility investment in the first quarter stood at 4.6 trillion won, including 2.1 trillion won in chip production. Samsung said it would continue to reduce investments in dynamic random memory chips (DRAMs), citing weak global demand.
Samsung's curved SUHD TV [Courtesy of Samsung]
Samsung's display section also did not score well. The display division recorded a first-quarter operational loss of 270 billion won because demand for LCD sales remained weak. The company expects OLED panels for smart devices to sell well in the second quarter.
Samsung display director Lee Chang-hoon said that the company is ready to increase its investment in the OLED line-up but failed to provide a clear vision.
Business Korea’s report showed Samsung Display was investing more to increase production lines for OLED displays at its existing factory in Tangjeong in South Chungcheong Province. If completed in the first half of 2017, the factory's monthly capacity is expected to increase from 39,000 sheets to 90,000.
IHS forecast the global OLED panel market would grow to $29.1 billion in 2022 from $8.7 billion in 2014. Demand for flexible OLED panels in the smartwatch and automotive display sectors has been rising because they offer better design flexibility than LCD panels.
Aju News Park Sae-jin =swatchsjp@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
