Samsung Electronics sees estimate-beating 50.3% jump in Q1

A customer checks out the Galaxy S22 smartphone at a Samsung store in Seoul, April 7. Newsis

Samsung Electronics said Thursday it was likely to report its best first-quarter earnings in four years on the back of solid semiconductor and mobile phone demand.

In its earnings guidance, the South Korean tech giant estimated its operating profit at 14.1 trillion won ($11.5 billion) for the first three months of the year, up 50.3 percent from a year ago.

Its January to March operating income estimate beat the market consensus of 13.2 trillion won in data compiled by Yonhap Infomax, the financial arm of Yonhap News Agency that recently surveyed 10 brokerage houses.

Samsung projected its sales at 77 trillion won in the first quarter, also up 17.7 percent from a year earlier. The figure is also above the market consensus of 76.8 trillion won.

If the preliminary result stands, it would mark the company's record first-quarter sales and the third consecutive quarter that the tech giant has logged 70 trillion won in quarterly sales.

Operating profit and sales rose 0.56 percent and 1.66 percent, respectively, from the previous quarter.

The world's largest memory chip and smartphone maker did not break down the performances of its respective business divisions ― it will announce detailed earnings later this month.

In the January to March period, prices of memory chips, core products that support a great portion of Samsung's top and bottom lines, held up better than expected.

Analysts estimated Samsung's semiconductor business earned 25 trillion won in sales and 8 trillion won in operating profit, up from 19.1 trillion won and 3.37 trillion won from a year ago.

Robust businesses of smartphones and high-end home appliances are also believed to have helped boost the tech giant's profits.

Samsung launched its latest flagship smartphone series, the Galaxy S22, in late February.

Sales of the series are expected to soon surpass 1 million in South Korea, according to the company, which is two weeks faster than the Galaxy S21 series did and 47 days faster than the mega-hit Galaxy S10 did in 2019. Preorders were more than double those for the Galaxy S21 series worldwide.

The upbeat forecast came amid a series of external challenges, ranging from volatile raw material costs spurred by Russia's invasion of Ukraine to global supply chain disruptions.

Samsung said there was no immediate impact from the war in Ukraine on its chip production thanks to "diversified sources for materials" and ample inventory of key materials such as neon.

Last month, it temporarily suspended product shipments to Russia due to major disruptions in global logistics in the region. But its TV factory in Kaluga, southwest of Moscow, is in normal operation, Samsung said.

Samsung's performance for the rest of the year is forecast to become stronger as chip prices are expected to rebound, driven by increased demand.

"Amid limited supply, demand for memory will start to pick up, especially from data centers, in the third quarter," Eo Kyu-jin of DB Financial Investment said.

"The company is predicted to have its best performance ever this year, with annual sales of 318.7 trillion won and an operating profit of 63.9 trillion," he said. (Yonhap)