Galaxy sales push Samsung to record profit

 

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By Reuters and Stewart Mitchell

Posted on 6 Jul 2012 at 08:53

Steller sales of the Galaxy S III smartphone drove record quarterly profits of $5.9 billion at Samsung.

In its April-June earnings guidance, Samsung estimated its operating profit had jumped 79% thanks to high demand for its Gallaxy S III smartphone, with the range likely to have stretched its lead over rivals Apple and Nokia.

According to analysts, earnings will be even stronger in the current quarter as sales of the high-end Galaxy S III will increase dramatically, with shipments of the S III hitting 19 million this quarter.

Samsung is due to release its full second-quarter results - the first since former components chief Kwon Oh-hyun took over as CEO - towards the end of this month.

Our smartphones are flying off the shelves, with some outlets reporting 40-60% sales growth, but that's distorting the overall trading outlook

Profit from the mobile division is likely to have more than doubled compared to last year, with sales of around 50 million smartphones - at a rate of 380 every minute.

Current quarter mobile profits are expected to forge further ahead as the latest Galaxy model enjoys a boom before the next iPhone launch, with the mobile business bringing in more than 70% of Samsung's earnings.

While the next iPhone, expected later this year, will slow Samsung's handset earnings growth, it will boost the Korean firm's semiconductor earnings as Samsung is the sole producer of processing chips used to power the iPhone and iPad, and also supplies Apple with mobile memory chips, NAND flash and display screens.

Economic fears

While strong handset sales grab the headlines, more than doubling profit growth, other businesses such as chips and consumer electronics are battling weak prices and demand and a weak euro, which eats away at repatriated profits.

In a sign that the euro zone crisis is exercising minds in boardrooms around the globe, Samsung executives said this week the group was operating to a contingency plan.

"Europe is our biggest consumer electronics market and we may have to initiate cost cuts and product price increases should the Euro fall further from the current level," who didn't want to be named as the plan is internal.

"Our smartphones are flying off the shelves, with some outlets reporting 40-60% sales growth, but that's distorting the overall trading outlook which is more challenging due to the weak global economy and a weak euro."