Samsung Electronics posted the second-biggest operating profit in its history thanks to robust demand for semiconductors and display panels, a regulatory filing showed on Thursday.
Operating profit was 9.9 trillion won (8.77 billion U.S. dollars) in the January-March quarter, up 48.27 percent from a year earlier. From the previous quarter, the profit increased 7.35 percent.The figure was the largest except Samsung’s record high of 10.16 trillion won in operating profit, which was tallied in the third quarter of 2013. Revenue added 1.54 percent from a year earlier to 50.55 trillion won in the March quarter, but net income surged 46.29 percent to 7.68 trillion won. Samsung’s profitability was sharply enhanced. The ratio of operating profit to revenue reached 19.6 percent in the quarter, up 6.2 percentage points from a year earlier.
The majority of Samsung’s first-quarter earnings was generated in the chip-making unit, which posted 6.31 trillion won of operating profit on revenue of 15.66 trillion won. The semiconductor division’s profit was the biggest-ever in Samsung’s history, topping the previous record high of 4.95 trillion won tallied in the previous quarter. The chip division’s revenue was up 40 percent compared with a year earlier. The unit’s operating margin was 40.3 percent, more than doubling 19.6 percent for Samsung’s overall margin.The chip unit’s profit was forecast to keep a growth momentum given the rising prices of DRAM and NAND flash memory chips. Samsung is the world’s largest memory chip maker.
According to market researcher Gartner, the global chip market was predicted at 386 billion dollars in 2017, which is 12.3 percent higher than the previous year. The display panel-making division recorded an operating profit of 1.3 trillion won in the first quarter, making little change from the previous quarter’s 1.34 trillion won. Demand was strong for high-end products, such as flexible organic light-emitting diode (OLED) along with ultra high definition (UHD) and liquid crystal display (LCD) panels. The smartphone business logged 2.07 trillion won of operating profit, down from 3.89 trillion won recorded in the same period of last year. Negative effect lasted from last year’s discontinuation of its flagship Galaxy Note 7 smartphones, while the release of its next strategic smartphone Galaxy S8 was deployed to April.
The consumer electronics unit registered 380 billion won of operating profit on revenue of 10.34 trillion won. The profitability was relatively low due to the South Korean currency’s ascent to the dollar and higher prices of panels used for TVs. Samsung shares rose 2.43 percent to settle at the record closing high of 2.192 million won. The shares surged to 2.226 million won in earlier trading. Samsung said at a press conference that this year’s facility investment would rise sharply compared with last year though the exact number has yet to be fixed. The company spent 9.8 trillion won on facilities in the first quarter. The company sold a total of 93 million mobile phones and 6 million tablets during the quarter. Smartphone sales were in the mid-80 percent of the total mobile phone sales. About 10 million LCD TVs, manufactured by Samsung, were sold in the quarter. As part of efforts to enhance the value of shareholders, Samsung planned to repurchase and retire treasury stocks worth a whopping 49.3 trillion won, including 40 trillion won currently owned and 9.3 trillion won newly bought.