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Samsung's Q1 profit surges on smartphone sales


10:56, April 26, 2013

SEOUL, April 26 (Xinhua) -- Samsung Electronics, the world's largest maker of handsets, memory chips and flat screens, said Friday that its operating profit surged in the first quarter on the back of solid demand for its Galaxy smartphones.

Operating profit rose 54.32 percent from a year earlier to 8.78 trillion won (7.92 billion U.S. dollars) in the first quarter, according to an e-mailed statement. The reading was nearly the same as the previous record high of 8.84 trillion won tallied in the fourth quarter of 2012.

Sales increased 16.78 percent to 52.87 trillion won, and net income gained 41.73 percent to 7.15 trillion won over the cited period.

The IT & Mobile Communications (IM) division, which makes handsets, logged an operating profit of 6.51 trillion won, accounting for more than 70 percent of the total. Revenue increased 7 percent from three months earlier to 32.82 trillion won.

Samsung was estimated to sell around 70 million smartphones during the quarter, the record quarterly high in the company's history and ranking first in terms of the world's top smartphone seller.

Market watchers forecast that Samsung's second-quarter earnings would reach a fresh record high thanks to demand for its new flagship model Galaxy S4 amid no specific rival during the second quarter. Apple allegedly delayed the launch of its new model to the third quarter.

The Galaxy S4, equipped with most high-quality features, was launched for the first time in Seoul Friday. Samsung planned to roll out the Galaxy smartphone via 327 wireless carriers, including AT&T, Vodafone and Telefonica, in 155 countries during the second quarter.

Samsung unveiled negative outlook."Samsung anticipates smartphone sales to stay flat in the second quarter. As more mid- to low-end mobile devices enter the market and new premium products are rolled out, the race for market share will intensify," the company said in a press release.

The semiconductor business registered 8.58 trillion won in revenue, down 11 percent from three months earlier. PC DRAM supply continued to decline in the quarter amid weak demand for PCs, while demand for mobile DRAM, used in smartphones and tablets, remained stable, Samsung said.

Prospects for the PC DRAM market are uncertain due to tighter demand and narrower market size, the company said, noting that mobile DRAM will continue to see growth amid stronger appetite for high-performance, high-density chips.

The display panel-making business saw its revenue decline 8 percent to 7.11 trillion won, with its operating profit posting 77 billion won. The fall came as global economic slowdown reduced demand for overall panel demand amid weak seasonality. Average selling price (ASP) of LCD panels was estimated to fall in the upper single-digit percentage range, Samsung said.

The consumer electronics division, which makes TVs, posted an operating profit of 230 billion won on revenue of 11.24 trillion won. The revenue fell 23 percent on-quarter due to seasonally low demand for consumer electronics.

Samsung forecast that sluggish demand would linger into the second quarter, saying that it will continue to expand sales of its premium TV lineup such as region-specific LED models. "We may experience stiffer competition in the mobile business due to expansion of the mid- to low-end smartphone market while TV growth will continue to wane in developed markets," said Robert Yi, Samsung's senior vice president. "We expect to increase R&D spending for strengthening our competitiveness ahead of planned new product launches."

Samsung spent 3.9 trillion won on facility investment during the first quarter. Samsung said that its overall capital spending in 2013 is likely to be similar to the 22.8 trillion won invested in 2012, noting that it will lift investment from the second half of the year.

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