Samsung hopes for a better second quarter, though cautious on outlook

Samsung on Wednesday tipped further earnings improvement in the second quarter after confirming its highest profit in three quarters in January-March, but voiced some caution about the second-half outlook. Samsung’s renewed focus on design after a period of stagnation in its smartphone range appears to be paying dividends so far, with analysts tipping annual profit for 2015 to beat last year’s by almost 11 percent. The South Korean giant reported a first-quarter operating profit of 6 trillion won ($5.64 billion), in line with the 5.9 trillion won profit it had guided for earlier this month. Though still 29.6 percent lower than a year earlier, it was Samsung’s best result since the June quarter last year. “In the second quarter, the company expects its overall earnings to increase compared to the previous quarter,” Samsung said in a statement, citing the launch of its new flagship Galaxy S6 smartphones. The semiconductor business remained the top earner, reporting a 50.2 percent profit jump to 2.93 trillion won, the highest since the third quarter of 2010. The firm said it saw strong demand for memory chips, while profitability for its system chip business also improved. While the mobile division’s profit fell 57.4 percent from a year earlier to 2.74 trillion won, it was the highest in three quarters as the rollout of new mid-range devices like the Galaxy A and Galaxy E series boosted smartphone shipments sequentially. The Galaxy S6 went on sale earlier this month and Samsung says it will struggle to keep up with demand in the near term. The devices boast design features like metal casing and a sleek look, and use more of Samsung’s own Exynos processors and other chips than before. Even so, few expect Samsung to return to the record profits of 2014 given intensifying competition in the global smartphone market. At the high end, Apple’s latest iPhone 6 has been a major hit, while at the bottom end companies like China’s Xiaomi are proving hard to beat. Apple topped Wall Street’s profit forecasts on Monday as it sold more iPhones in China than the United States for the first time. Samsung warned that global demand may weaken later this year due to the depreciation of the euro and emerging market currencies, saying the typical industry pattern of a stronger second half may not be as pronounced this year. The median forecast from a Thomson Reuters I/B/E/S poll of 49 analysts tips Samsung’s 2015 profit at 27.7 trillion won, up 10.8 percent from 25 trillion won in 2014. Reuters