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Samsung Power Smartphones to Record Profit $4.5 Bn

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Posted by on Friday, July 27, 2012, 10:38
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South Korea’s Samsung Electronics Friday posted a record net profit of 5.19 trillion won ($4.53 billion) in the second quarter, powered by strong smartphone sales despite the global downturn.

Samsung Power Smartphones

The company, the world’s biggest technology firm in revenue terms, also reported a record operating profit in April-June of 6.72 trillion won.

The net profit represented a 48 percent gain from a year earlier while operating profit jumped 79 percent year-on-year.

Samsung attributed its record figures to robust demand for mobile devices including high-margin smartphones, along with strong sales of its ultra-thin displays.

Total revenue rose 21 percent to 47.59 trillion won, in a quarter that is usually quieter for technology companies.

Samsung said its differentiated products and competitive technology helped it overcome a difficult business environment, but struck a note of caution for the months ahead.

“As we move into the second half, continued fiscal instability in Europe and its effect on the global economy will result in the possibility of a slower than expected recovery and intensified market competition,” said senior vice-president Robert Yi in a statement.

Analysts were more upbeat, expecting an even better performance in coming quarters.

They said smartphone earnings — which account for more than 50 percent of operating profit — would remain a strong contributor to the bottom line.

“The mobile division, which alone will see an operating profit of 4.8 trillion won in the third quarter, was helped by sales of the Galaxy S III smartphone, and it will lead the firm’s overall growth,” said Y.B. Oh, an analyst at Hanmag Securities.

The company has sold more than 10 million Galaxy S III phones since its launch about two months ago.

Oh said the chip division would also register its biggest profit of around 1.6 trillion won in the third quarter, with prices expected to stabilise due to new product releases.

Kiwoom Securities analyst Kim Sung-In forecast likely overall operating profit of at least 7.7 trillion in the third quarter.

“I would sell Apple shares and buy Samsung. Samsung’s operating profit margin also will exceed that of Apple in the next quarter,” Kim said.

But some analysts said risks remain, including in the intensely competitive but highly lucrative smartphone market.

Declining European demand could result in slowing sales growth of high-end smartphones. And the expected launch of Apple’s new iPhone in the third quarter could see some customers switch away from Samsung’s models.

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