Samsung reports higher revenue in Q1 of 2017

Samsung Electronics announced financial results for the first quarter ended March 31, 2017. Samsung’s revenue for the quarter was KRW 50.55 trillion, an increase of KRW 0.77 trillion YoY.

In the first quarter, sales for the memory and display businesses increased, owing to high ASPs and strong sales of premium products. However, revenue from the mobile business decreased due to a decline in flagship product sales.

Profits were driven by the components businesses, namely the semiconductor division and the display panel segment.

For the IT & Mobile Communications (IM) Division, earnings declined QoQ due to price adjustment of the Galaxy S7. As for the Consumer Electronics (CE) Division, earnings for the TV business declined YoY due to higher panel prices.

Looking ahead to the second quarter, the company expects to achieve growth on the back of continued robust memory performance together with improved earnings from the mobile business following the global rollout of the Galaxy S8 and S8+.

For the mobile business, market competition is expected to intensify in the second half. Against this backdrop, the company will strive to maintain profitability through robust sales of the Galaxy S8 and S8+ and the launch of a new flagship smartphone in the second half. Moreover, Samsung will also look to sustain profitability in the mid- to low-end segment by launching new products and streamlining the lineup.

For the TV business, Samsung will focus on increasing profitability by expanding its high-end lineup, including ultra-large size and UHD TVs.

Meanwhile new business opportunities are expected in the set business with developments in cloud, AI and connectivity solutions for smartphones and smart home products.

In response to these paradigm shifts, the company is aware of the need to strengthen its capabilities via strategic investments and M&As.

While smartphone and tablet market demand saw a slight decrease QoQ due to seasonal effects, smartphone shipments for the division slightly increased. This increase was largely due to the newly released Galaxy A 2017 series and solid sales in the mid- to low-end segment in emerging markets. However, overall profit for the division decreased due to price adjustments of Galaxy S7 and S7 edge.

Looking ahead to the second quarter, while market demand for smartphones and tablets is forecast to remain flat, the worldwide rollout of latest flagship models, Galaxy S8 and S8+, is expected to help the division increase revenue and profit QoQ, while smartphone shipments are expected to remain flat due to decreased sales of mid- to low-end smartphones. The Galaxy S8 and S8+, which were launched on April 21, show robust initial sales.

As for the year ahead, Samsung anticipates market demand in smartphones to slightly increase with solid replacement demand growth in the mid- to high-end segment. However, competition is expected to intensify with newly launched smartphones in the market.