Announced on Thursday, Samsung has posted its earnings report for the first fiscal quarter of 2017 — which perfectly line up with the predictions made earlier this month. The profit numbers for the said quarter are record breaking while the revenues have flatlined. It has seen this massive growth, courtesy of its soaring memory and display business. Also, this quarter comes with the exciting news of another flagship launch — expected in the second half of this year.
In the current quarter, Samsung has reported an operating profit of 9.9 trillion won (approx $8.7 billion). This is an increase of 3.22 trillion won ($2.85 billion), 48 percent higher than the profit for the same quarter a year before. It is also the highest operating profit figure for the quarter ended March in over three years. The same was 9.56 trillion won in the first quarter of 2013. It’s also the second biggest quarter ever scored by the Korean giant. The revenue figure, amounting to 50 trillion won (approx $44 billion), continues to remain flat for this quarter.
As for the individual verticals, the Semiconductor business posted 6.31 trillion won (approx $5.6 billion) in operating profits on the back of consolidated revenue of 15.66 trillion won (approx $13.86 billion) for the quarter. The Korean giant’s display panel segment posted 7.29 trillion (approx $6.45 billion) in revenue, coupled with 1.30 trillion (approx $1.15 billion) in operating profit.
Though the tablet and smartphone market witnessed a minimal decline on a quarter-to-quarter basis, Samsung’s phone shipments for the division slightly increased. The IM Division – comprising of the mobile communications and networks businesses – posted 23.50 trillion (approx $20.8 billion) in consolidated revenue and 2.07 trillion (approx $1.83 billion) in operating profit. This uptick was attributed to the fledgling sales in emerging markets, especially for the newly released Galaxy A 2017 series and other mid-to-low end segment phones.
In addition, Samsung has reported rather decent financial earnings though it has been plagued with one controversy after another in the previous year. The Korean giant’s phablet-sized flagship device, Galaxy Note 7, started going kaboom on people’s faces earlier this year and had to be recalled immediately. Around 96 percent of the total 2.5 million devices sold were collected back. Now, call it fate, but this was followed with Samsung’s chief Jay Y. Lee being indicted for embezzlement and bribery charges in the largest scan of the country.
As most analysts suggest Samsung’s memory and display business continues to outperform expectations, they’re booming, to say the least. We already have evidence in the form of previous quarterly reports, where these businesses contribute around 68 percent to the overall operating profit. It’s the same case in the three month period ended March 2017. It does not account for the sales of the Galaxy S8 lineup — which is selling like hot cakes and had amassed pre-orders 30 percent more than the Galaxy S7. Here’s a round-up of the current fiscal quarter:
This bombastic, record-breaking growth in the current quarter has led Samsung’s share prices to soar through the roof. The company is currently trading around 2.80 percent higher than its previous closing price. The ticker is currently at 22,00,000 won.
Also, for those aloof, Samsung acquired well-known auto parts and audio equipment manufacturer, Harman for close to $8 billion earlier last year. The Korean giant is looking to follow the trend and is currently said to be developing a smart home speaker to rival the likes of Amazon Echo or Google Home. But, it has mentioned that Harman’s financials haven’t started contributing much to the overall growth yet. The blog post reads:
Regarding the recently acquired Harman, its earnings were consolidated into Samsung’s first quarter results beginning March 11. As a result, its impact on the first quarter financials was minimal.
Looking forward to the second quarter, the Korean giant expects the overall financials including profits and revenues to soar. Their massive uptick would be due to the introduction of Samsung’s latest flagship devices — Galaxy S8 and Galaxy S8 Plus. The silicon and display business will continue to outperform due to its technology and massive demand. The former will skyrocket due to increasing demand for its 10nm processors, while the latter due to strong demand for flexible OLED screens. With regards to the same, the blog post adds,
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+.
As for the complete fiscal year, Samsung predicts their earnings will continue to progress year-on-year. This will be, as you guessed, due to favorable supply-demand conditions for memory (3D NAND and 10nm chips) and OLED panels (flexible ones in the second half). It will also append its high-end TV lineup
Additionally, the Korean giant is now past the Galaxy Note 7 explosion debacle and will continue to focus on increasing profitability component for its flagship products as well. It has taken this moment, the quarterly report, to announce that their next flagship will be released in the second half of this year. While we hope it would continue the tradition and debut another Note device, however, it has not confirmed the naming criterion as of yet.
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.
It also acknowledges that competition will continue to rise, especially with the release of Apple’s massively altered 10th Anniversary iPhone device. Samsung is banking on the success of its smartphones device but is also looking to strengthen its presence in several other fields, such as cloud, artificial intelligence, and connectivity through strategic investments and M&As. The company also aims to increase focus on Internet of Things (or connected) devices and automotive (self-driving software) services.
