Samsung announce profits in first quarter off the back of flagship S9 sales and a strong performance in memory business. However Samsung expect a slower second quarter
Samsung has announced its first quarter results for 2018 with a consolidated revenue of £40.8 (KRW 60.56 trillion) billion and £10.54 billion (KRW 15.64 trillion) in operating profit.
Revenue in the first quarter was heavily driven by increased sales of the flagship Galaxy S9 and the memory business.
Year on year total revenue grew 20 per cent to £40.85 billion (KRW 60.6 trillion) with operating profit for the quarter at a record high, representing an increase of £3.8 billion (KRW 5.7 trillion). The operating margin also increased in the first quarter at 25.8 per cent, up 6.2 percentage points year on year.
Total capital expenditure in the first quarter was £5.79 billion (KRW 8.6 trillion) and this included £4.85 billion (KRW 7.2 trillion) for the semiconductor business with £539.3 million (KRW 0.8 trillion) for the display panel business.
The IT and mobile communications division generated £19.2 billion (KRW 28.45 trillion) in consolidated revenue and £2.55 billion (KRW 3.77 trillion) in operating profit for the quarter.
An early launch of the flagship Galaxy S9 and S9+ and continuously strong S8 sales allowed for Samsung to increase smartphone shipments despite an overall decline in demand in the smartphone and mobile market.
However Samsung is expecting profitability in the second quarter to decrease due to a slow down of sales for the flagship models and increased marketing costs.
Further ahead in the second half, Samsung plan to strengthen in the premium market by launching a new flagship device and look to maintain a long-tail of sales for the S9 and S9+ as well as previous flagships.
Samsung expect increased earnings quarter on quarter for the networks business as Samsung look to expand its LTE business and leading the world in the commercialisation of 5G.
Meanwhile the semiconductor business contributed heavily to the results, as Samsung announced profits of £7.8 billion (KRW 11.55 trillion) in operating profit with £14 billion (KRW 20.78 trillion) in consolidated revenue for the quarter.
A demand for memory chipsets for high value added servers and graphic products impacted considerably to the semiconductor business’ earnings.
Also contributing to the first quarter earnings was the system LSI and Foundry business as a result of strong demand for chips for smartphones and crypto-currency mining.