Samsung beats first-quarter forecasts with $44.2bn revenues

Samsung Electronics posts first-quarter revenue of KRW 47.12tn ($44.2bn) and KRW 5.98tn operating profit, beating the company’s forecasts

Samsung Electronics beat its first-quarter forecasts with KRW 47.12tn ($44.2bn) revenues and operating profit of KRW 5.98tn.

The South Korean firm forecast revenue of KRW 47tn and profit of KRW 5.9tn, which came in 13% up on the last quarter of 2014 to beat the forecast 11% increase, giving some cheer to investors.

However, first-quarter revenue was actually down 10% compared with the previous quarter and down 12% compared with the previous year, and operating profit was down 30% year-on-year.

Some analysts said that, although the results are encouraging, the company is not out of the woods yet.

Most of the profits came from Samsung's IT and Mobile business, but analysts said this was mainly driven by sales of low and mid-tier devices. Analysts said the company had yet to see the full benefits of the Galaxy S6 and Galaxy S6 edge, which went on sale only in April 2015.

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Samsung's component businesses look up

Samsung's other businesses reported positive results, including the beleaguered display panel business.

Semiconductor operating profit was up almost 9% compared with the previous quarter, while display panel profit was up almost 11%.

Analysts said an increase in demand for premium LCD for TVs and Oleds for smartphones have also helped keep the business afloat.

The positive results allowed Samsung cautious optimism for the second quarter.

For its semiconductor business, Samsung expects strong mobile demand driven by flagship smartphone models and continued growth in demand for datacentres.

The company expects solid demand for display panels in the coming quarter and, although Samsung predicts smartphone and tablet demand will stagnate, it expects improved earnings led by increased high-end sales with a global expansion of S6 shipments.

Samsung's other smartphones and tablets are expected to follow suit, but Samsung expects the increase to balanced out a decrease in the sales of low and mid-range models and marketing costs.

Sales of iPhones hoist Apple results

Samsung’s results came a day after Apple reported its “best ever” January to February quarter, driven largely by demand for the company’s iPhone.

However, Ben Preston, director of Orbis Investments, believes that, even though the current iPhone may be a better phone than the Galaxy, that does not necessarily mean Apple is a better investment than Samsung.

“Samsung’s quarterly results give an interesting snapshot of short-term performance, and long-term investors may be more interested by the value on offer at Samsung – if they are willing to go against the crowd,” he said.

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