Samsung Electronics confirmed a sharp fall in profit in the first quarter, hurt by the drop in memory chip prices, losses at its display business and lower margins in smartphones after a revamp of its lower-end models. Samsung said it expects memory and display demand to improve from the second half of the year, but the smartphone and TV business will remain "challenging" due to the intense competition and uncertain economic environment.
In the first quarter, net profit more than halved, to KRW 5.04 trillion from KRW 11.69 trillion, and operating profit fell to KRW 6.23 trillion from KRW 15.64 trillion, in line with the company's preliminary guidance. Revenues fell 13.5 percent to KRW 52.39 trillion, and the EBITDA margin declined to 25 percent from 36 percent a year ago.
Memory sales were down 34 percent to KRW 11.47 trillion, display panels fell 19 percent to KRW 6.12 trillion, and the smartphone business also posted lower revenues, down 6 percent to KRW 25.92 trillion. Consumer electronics grew by 3 percent to KRW 10.04 billion, but TV sales were flat.
Smartphone revenues lower
Samsung said mobile revenues were up 17 percent from the fourth quarter, despite the usual seasonal slowdown, thanks to strong sales of the new Galaxy S10. However, the reorganisaton of its mid-range and below devices meant only "modest" volume gains for the quarter. Profitability improvements were limited by increased expenses for higher-spec products like the new Galaxy Fold, brand marketing, and the lineup refresh. While the networks division performed better due to the launch of 5G in Korea, total operating profit at the telecom division fell to KRW 2.27 trillion from KRW 3.77 trillion a year ago.
Samsung said it expects total smartphone sales volume to increase slightly in Q2 compared to Q1, as sales of the S10 series remain strong and the new A series rolls out. It plans to further strengthen its lineup competitiveness with innovations such as 5G devices and the A80, and by a reorganization of the mass-market lineup, which puts the A series at the centre. A new Note model is also planned for the second half of the year to help boost sales, and Samsung said it will work further on cost efficiency to boost margins and enhancing its lead in the premium segment.
