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Likely 45% Growth In Q1 Profits For Samsung

Likely 45% Growth In Q1 Profits For Samsung
There was likely a 45 per cent growth in the profits of the South Korean electronics giant Samsung Electronics Co Ltd for the January-March quarter driven by increased sales of smartphones, TVs and home appliances.   The chip business of the company however is expected to report a slash in profits following suspension of production at its chip making plant in the United States because of devastating storm.
Consumers forced to mostly stay back home because of the Covid-19 pandemic spend more for purchasing a range of high-margin consumer electronics which in turn resulted in a global shortage of semiconductor chips.
According to a Refinitiv SmartEstimate drawn from 16 analysts, it is expected that the South Korean electronics giant will report operating profit in the quarter to have climbed to 9.3 trillion won ($8.2 billion). SmartEstimates assign more weight to forecasts from consistently accurate analysts.
That would be the highest operating income level for the first quarter for the company since the first quarter of 2018. There was likely a growth of 12 per cent in the revenues of the company.
Samsung is set to announce its preliminary first-quarter results on Wednesday.
According to forecasts of analysts, the mobile division of the company seems to have had a block buster quarter as the company benefited from the launch of its Galaxy S21 series in mid-January which was at least a month prior to the usual annual release schedule for that flagship model of the company.
According to Counterpoint Research, it has also been estimated that about 23 per cent of the global smartphone market during the quarter has been captured by the largest smartphone maker of the world driven by the launch of its flagship model as well as the relatively cheaper than usual pricing for some of its premium devices. For example, the price of the S21 was made available to customers at $200 lower than the S20.
In comparison, Samsung had about 20 per cent of the global smartphone market in the same quarter a year ago while it commanded only 16 per cent of the market share in the preceding quarter when the iPhone 12 was released by its arch rival Apple Inc.
According to analysts, the company also gained from the brisk business of its high-margin accessories such as Galaxy Buds. Analysts estimated that the likely operating profit of the division was higher by more than 1 trillion won compared to the same quarter a year ago to about 4.15 trillion won.
Analysts also expect Samsung to report more than double operating profit for its TV and home appliance business which it expected to come around 1 trillion won.
It is however also expected that there would be about a 20 per cent drop in the profits for Samsung's semiconductor business to about 3.6 trillion won despite very high demand for its chips. The additional costs of ramping up new production as well as losses at the company’s factory in Texas, US, because of a very hard winter which forced production shut down in mud-February, is likely to have hit the profits of this business. As of end of March, production at the plant had returned to near-normal levels, Samsung said.

Christopher J. Mitchell

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