Samsung expected to hit record profit in Q1
By Kim Yoo-chul
Samsung Electronics is thought to have improved its bottom line to record levels in the first quarter. This is due to strong smartphone sales and a recovery in parts businesses such as memory chips and flat screens.
The market consensus is that the firm’s operating profit will be around 6 trillion won during the first three months of this year, beating its previous record of 5.2 trillion won in the fourth quarter of last year.
Specifically, Citibank says Samsung will reap ``historically high’’ profits during the first quarter, while JPMorgan is more optimistic as the investment bank expects Samsung’s operating income will surpass 6 trillion won during the January-March period.
In addition, the bullish run of Apple on the New York bourse is having positive effects on its major Korean suppliers like Samsung Electronics. Apple is projected to buy $11 billion worth of Samsung parts in 2012, up from $7.8 billion last year.
The Korean firm also says it will set a new record in the first quarter although they refused to confirm whether it would be higher than 6 trillion won.
``The first quarter is better than the previous one in terms of operating profit,’’ a Samsung Electronics insider said Thursday, asking not to be identified.
Company officials and market analysts have no doubt that the world’s biggest maker of memory chips and flat-panel displays will achieve 20 trillion won in operating profit this year on the back of brisker performances in digital devices.
``Samsung is seeing a rise in its stock price and that’s mostly due to hopes that it will record more than 6 trillion won in operating profit for the first quarter alone,’’ said a fund manager from a U.S.-based investment bank in a phone interview with The Korea Times.
The bullish run of Samsung in the Seoul bourse is similar to that of Apple, one of its closest rivals but also important customer.
Apple shares ended at a record-high close of $617.62 recently, taking its gains this year to 52.5 percent. Its current corporate value was $565 billion, accounting for 4.5 percent of the Standard and Poor’s 500 index.
Samsung stocks have gained 24 percent this year. It has added 40 trillion won in assets, expanding the firm’s total assets to 192 trillion won, taking up 18 percent of the KOSPI index.
It has shipped over 5 million of its Galaxy Note hybrid device, which Samsung has been selling abroad countries since October.
Shin Hyun-joon, an analyst at Dongbu Securities, expects the sales of Samsung’s Galaxy smartphones to reach some 43 million during the first quarter.
Plus, prices of computer memory chips and flat screens used in almost all electronic devices are increasing, which is another factor for the company to see record profit in the first quarter. Benchmark DDR3 2-gigabite DRAM prices have recovered $1 per chip.
Meanwhile, Samsung has been receiving more orders from clients to supply chips and LCDs amid struggles at its Japanese and Taiwanese competitors.