24/Apr/2014 - Last News Update: 07:00

Samsung profits rise 81% boosted by smartphone sales

Category: Business

Published: 27th Apr 2012 02:07:55

Samsung Electronics has seen profits rise 81% in the first quarter, boosted by strong smartphone sales and increased profitability at its display panel unit.

Net profit was 5.05tn won ($4.5bn; £2.8bn) in the three months to the end of March, up from 2.78tn won last year.

The success of Samsung's Galaxy range has seen it become one of the world's biggest-selling smartphone makers.

Samsung is also the world's biggest TV and flat screen maker.

"We cautiously expect our earnings momentum to continue going forward, as competitiveness in our major businesses is enhanced," said Robert Yi, head of investor relations at Samsung.

Samsung's handset earnings may weaken in the latter half of this year, with the possible launch of Apple's iPhone 5”

The firm said its IT and mobile communications division, which manufactures the smartphones, made an operating profit of 4.27tn won during the period, as revenues in the division surged 86% from a year earlier.

Samsung will unveil the latest version of its Galaxy range of phones on 3 May.

"The smartphone market has almost only two players, Samsung and Apple," said Lee Sei-Cheol of Meritz Securities.

"Since its Galaxy3 phone is being unveiled in May, Samsung will keep enjoying sales growth in its mobile phone division."

Global demand for smartphones is expected to increase further in coming years, with research firm IDC forecasting that global smartphone shipments will rise by a third to 659.8 million units in 2012.

Analysts said that given its robust growth and dominance in the sector, Samsung was well placed to benefit from this growth and boost its market share.

However, given the robust growth in the sector, other smartphone makers are also keen to introduce new products and tap into the fast-growing market.

Samsung is facing stiff competition from rivals such as US-based Apple, Finland's Nokia, and Taiwan's HTC.

Apple, which said earlier this week that it sold 35 million of its iPhones in the first quarter, is expected to launch a new version of its handset later this year.

Analysts said that as more models are launched, manufacturers may have to the cut price of their handsets in a bid to attract consumers, a move that may see profit margins shrink.

"Samsung's handset earnings may weaken in the latter half of this year, with the possible launch of Apple's iPhone 5," said Brian Park of Tong Yang Securities.

Source:
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BBC News, 2012. Samsung profits rise 81% boosted by smartphone sales [Online] (Updated 27th Apr 2012)
Available at: http://www.ukwirednews.com/news/1424932/Samsung-profits-rise-81-boosted-by-smartphone-sales [Accessed 24th Apr 2014]

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