Samsung Q1 Net Profit Down 39%

As expected, Samsung Electronics reported a 38.8% year on year drop in net profit in the first quarter of the year to KRW4.6 trillion ($4.3 billion), from KRW7.6 trillion ($7.1 billion) in Q1 of 2014. Turnover was 12.2% lower YoY at KRW47.1 trillion ($44 billion) from KRW53.7 trillion ($50.1 billion).

Samsung’s display panel business achieved profit growth, thanks to increased sales of OLED panels for smartphones and LCD panels for premium TVs. The unit contributed KRW6.8 trillion ($6.3 billion) to total turnover and recorded an operating profit of KRW520 billion ($486 million).

The mobile business also saw profit growth, due to increased sales of new mid- to low-end smartphones and a decrease in marketing expenditures. Tablet and feature phone sales, however, decreased. The unit contributed KRW25.9 trillion ($24.2 billion) to Samsung’s overall turnover and posted an operating profit of KRW2.7 trillion ($2.5 billion).

In the second quarter, earnings for LCD panels are expected to remain solid, due to increased sales of premium products, such as UHD, Curved and 60″+ TV panels. The company said that although there is increased demand for OLED panels stemming from high-end smartphones, earnings associated with OLED panels are expected to see limited improvement due to costs required to start the new A3 production line.

Meanwhile for Samsung’s mobile business, market demand for smartphones and tablets is expected to remain at a similar level to Q1. Global sales are expected to improve with the worldwide launch of the Galaxy S6 and S6 edge, which Samsung says have been receiving positive feedback from the market. However, total smartphone shipments are expected to remain at the same level as the previous quarter, due to a possible decrease in sales of mid- to low-end models, while marketing expenses are expected to increase due to the global launch of the Galaxy S6 and S6 edge.

Samsung’s CE division, which includes the visual display business reported turnover in the first three months of the year of KRW10.2 trillion ($9.5 billion) but registered a loss of KRW180 billion ($168.1 million) for the quarter. The company said that market demand for flat panel TVs decreased due to the first quarter being a traditionally slow season, as well as the falling exchange rates in Europe, Russia and Brazil. An increase in material costs due to the strong US dollar further contributed to the losses.