Samsung Electronics Co. said first-quarter operating profit will be its highest ever, topping analyst estimates and continuing the company’s string of record results.
The world’s largest smartphone and semiconductor maker said on Friday it expected an operating profit of 15.6 trillion South Korean won ($14.7 billion) for the quarter, up 58% from 9.9 trillion won a year earlier. Samsung expects revenue will rise to 60 trillion won from 50.55 trillion won.
Analysts polled by S&P Global Market Intelligence expect the company to post an operating profit of 14.5 trillion won and revenue of 61.5 trillion won. Samsung will report final results later this month.
Samsung has already delivered record earnings for three straight quarters. In the final three months of 2017, its operating profit stood at 15.15 trillion won.
The better-than-expected profit forecast was aided by the early release of Samsung’s latest flagship device, the Galaxy S9. The handset’s initial sales—when demand is traditionally the strongest—started in March, placing it in the first quarter. Last year’s version, the Galaxy S8, didn’t hit shelves until April, a release delayed due to the costly global recall of Galaxy Note 7 devices.
Investors will monitor the Galaxy S9 sales closely when Samsung reports full results. Consumers have been less eager to upgrade, unimpressed by new features and balking at prices approaching $1,000.
One sign of the smartphone conundrum: Samsung priced the Galaxy S9 similarly to last year’s models. But the Galaxy S9+, with 64 gigabytes of memory and a larger screen, cost $43 more to make than the Galaxy S8+, driven predominantly by pricier semiconductors, according to IHS Markit, a market researcher.
Despite the upbeat profit forecast, the South Korean company’s shares slid 0.8% in early Friday trading over fears of how a U.S.-China trade fight could affect its thriving semiconductor business.
Samsung’s record results recently have been fueled by sales of memory chips, as the company capitalized on rising chip prices due to strong demand from the makers of internet-connected devices and data servers.
Samsung makes some memory chips in China, but those aren’t expected to be subject to any U.S. tariffs. But Chinese products using Samsung-made components could be affected.
Samsung, which has faced a leadership vacuum, got some relief after its de facto leader, Lee Jae-yong, was released from prison in February after spending about a year behind bars for his involvement in a government corruption scandal that rocked South Korea. An appeals court cut his five-year sentence, though Mr. Lee, grandson of Samsung’s founder, still faces a Supreme Court ruling later this year.
https://www.wsj.com/articles/samsung-expects-to-extend-its-earnings-hot-streak-1522976867?mod=e2tw
