Samsung profit up 42% thanks to Galaxy smartphones in Q1

Telecom Lead Asia: Samsung says its smartphone sales contributed to 41.6 percent growth in net profit to $6.4 billion in Q1 2013.

South Korea’s consumer electronics, which is battling legal issues in the U.S. and other markets, said its net profit soared 41.6 percent to 7.15 trillion won ($6.4 billion) in the first quarter of 2013 from 5.05 trillion won in the first quarter of 2012.

Operating profit rose 54 percent from a year ago to 8.8 trillion won, while sales were up 16.8 percent at 52.9 trillion won.

IDC on Thursday said Samsung shipped 70.7 million smartphones in the first quarter against Apple’s 37.4 million.

Of the total 8.8 trillion won operating profit, the IT and Mobile Communications division accounted for 6.51 trillion won, with sales of 32.82 trillion won in the first quarter — the bulk of it from the mobile business.

Profit at Samsung’s semiconductor division in the first quarter was put at 1.07 trillion won, compared with 700 billion won last year, on sales of 8.58 trillion won.

The display division, which makes flat panels for TVs and mobile devices, posted a profit of 770 billion won, up from 230 billion won a year earlier, but down on the two previous quarters.

“However the introduction of new devices and increased shipments of smartphone display panels, prevented steeper losses,” it added.

Samsung said Thursday that unexpectedly high demand for the new model was behind shipping issues that resulted in the postponement of its scheduled sales release in the US market this weekend.

According to IDC, though Samsung shipped more units than the next four vendors combined, what remains to be seen is how Samsung’s new Tizen-powered smartphones will look and feel later this year, and fit into the company’s overall smartphone portfolio in coming months.

In a statement Samsung said sound sales of the Galaxy S3 smartphone had aided profit margins, but cautioned that second quarter global demand was forecast to dampen.

“We may experience stiffer competition in the mobile business due to expansion of the mid- to low-end smartphone market,” said Senior Vice President Robert Yi.

Apple’s smartphone shipment volume hit a new first-quarter high thanks in part to the iPhone 5, with volume growing 6.6 percent year over year, IDC said. However, the last time the iPhone maker posted a single-digit year-over-year growth rate was Q3 2009. Apple’s mix of models shipped to market is increasingly diversified as it tries to reach new buyers.

Neil Mawston, executive director at Strategy Analytics, said reecntly: “Samsung grew 56 percent annually and shipped a record 69.4 million smartphones worldwide, capturing 33 percent marketshare in Q1 2013.”

Samsung shipped almost two times more smartphones and grew nine times faster than Apple during the quarter. With the flagship Galaxy S4 model likely to be in high demand, provided there are no major component shortages, Samsung should continue to deliver strong smartphone volumes worldwide in the second quarter of the year.

Apple shipped a lackluster 37.4 million iPhones worldwide in Q1 2013, up from 35.1 million a year earlier. Apple grew 7 percent annually during Q1 2013, which was the iPhone’s lowest growth rate ever in its history. Apple’s premium-only strategy for the iPhone is approaching a natural ceiling and it will need to expand deeper into large markets like China or launch a lower-priced iPhone model for mass-market users.

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