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Samsung Electronics Q1 net profit falls 30%

29 april 2011, 18:43
0
©AFP
©AFP
South Korea's Samsung Electronics said Friday net profit fell 30 percent year on year to 2.78 trillion won ($2.59 billion) in the first quarter due to weak demand for flat panels and televisions, AFP reports.

The world's largest memory chipmaker and second-largest mobile phone producer also reported a 32 percent dive in operating profit to 2.95 trillion won, its lowest figure in seven quarters.

Revenue was 36.98 trillion, a 6.8 percent rise year-on-year. The operating profit and revenue figures were in line with the company's earnings guidance released earlier this month.

Samsung said overall net profit had been declining since a strong first-quarter performance in 2010 because of lower memory chip prices and reduced profitability in liquid crystal display (LCD) panels and TV sets.

"A difficult business environment remained in the first quarter due to rising costs of raw materials, uncertainties in the financial market in Europe, and the devastating earthquake in Japan," said vice-president Robert Yi.

However, he forecast a "relatively limited" impact on Samsung's supply chain from Japan's March 11 disaster.

Yi said in a statement Samsung would "actively respond" to the challenges by improving cost-competitiveness in memory products, launching new smartphones and tablet PCs and focusing more on premium LCD panels and TVs.

The company predicted that tough business conditions would continue in the second quarter because of lingering worries over the global economy and tight competition in consumer electronics and the mobile businesses.

The telecoms, memory chip and digital media and appliances businesses drove revenue growth in the first quarter, Samsung said.

The memory chip business saw sales rise 12 percent year-on-year due to stronger demand for NAND products used in smartphones and tablet computers.

Telecoms continued a strong performance, with sales reaching 10.64 trillion won. Samsung sold 70 million mobile phones in the quarter and 18 percent of those were smartphones such as the company's flagship Galaxy series.

"Samsung is expected to post better quarterly earnings through this year thanks to rising prices of semiconductors and LCDs," Hanwha Securities analyst An Sung-Ho told Dow Jones Newswires.

"But LCD and TV sales growth, which are closely related to the global economic recovery and consumer confidence, will likely be keenly watched."

The company said its previously announced capital spending of 23 trillion won for this year would go ahead as planned.

Samsung Electronics, flagship of the Samsung group, employs some 190,500 people in 206 offices across 68 countries.

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