Samsung confirms improved Q1 earnings

Executives of Samsung Group affiliates walk out of the main door of Seocho Tower, southern Seoul, after Wednesday’s weekly regular meeting. / Yonhap

By Kim Yoo-chul

Samsung Electronics will beat market expectations for its first quarter performance, a senior executive said Wednesday.

“There have been a lot of reports about earnings forecasts for Samsung Electronics. It's fair to say that we will report improved profits during the January-March period,” Lee Joon, chief communications officer at Samsung Future Strategy Office, told reporters in a briefing at Seocho Tower, southern Seoul, Wednesday.

Chief executives of leading Samsung affiliates gather at the tower every Wednesday morning for a weekly management meeting.

It’s unusual for a senior executive at the office to comment on quarterly results ahead of their official release.

The market consensus for the company’s operating profit for the first quarter is 5.4 trillion won.

It posted 5.29 trillion won in operating profit in the fourth quarter, and 8.49 trillion won in the first quarter a year earlier.

Samsung expects its operating profit to steadily improve in the quarters to come, boosted by strong demand for its new smartphones, the Galaxy S6 and S6 Edge.

Samsung Electronics will announce its guideline for the first-quarter earnings on Apr. 7.

Separately, the head of its TV division said the world's biggest TV manufacturer "fared well" in the first quarter, though the outlook of the global TV industry remains uncertain.

“The market was tough. However, our business matched up with our internal targets. We're done with recovery," Kim Hyun-seok said.

Hit by increased currency volatility, Samsung's TV business is seeing its profits squeezed.

Meanwhile, cheap Chinese TV producers TCL, Hisense and Haier have become aggressive in raising their share by releasing products with enhanced picture quality at heavy discounts.

According to Bernstein Research, some challenging factors that Samsung should address are heightened competition and reduced margins in its key handset business; a sell-off in Korean and/or Asian equities; a delayed chip market recovery due to worsening cannibalization of PCs by tablets; and the abrupt strengthening of the Korean won, which could reduce sales and increase costs.