Samsung is forecasting that its first-quarter operating profit will hit $5.7 billion-a gain of about 10 percent from the same period last year-while its operating profit will rise 4 percent in this interval. Samsung has seen its earnings deteriorate over the past couple of years but the company is expecting a significant boost in its Q1 2016 earnings thanks in part to sales of the Galaxy S7 and Galaxy S7 edge. From the previous quarter, the first-quarter estimate also marks a 7.49-percent rise.
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“Energy, petrochemicals firms and steelmakers are entering an upside cycle, which means corporate earnings would not be bad”, said Kim Dae-jun, an analyst at Korea Investment & Securities.
Investor response to the estimate was equally wary, with Samsung’s share price closing down 1.25 percent on Thursday. This is the result of the massive estimated sales of the S7 devices that could account for more than 9 million units in the first month. Despite a fall in average prices of memory chips, it kept up profit and edge in the field through a product mix of highly lucrative next-generation 3D NAND (non-volatile storage) flash and 10-nanometer-class dynamic random access memory (DRAM) chips.
A report from CounterPoint Research suggests that sales of the new smartphones are 20 percent higher than the Galaxy S6, with US sales estimated 30 percent higher. “The Galaxy S7 and other budget models will continue to support the IT and Mobile segment”.
Samsung also launched an annual phone upgrade program and opted not to raise the Galaxy’s pricing this year, angling to avoid sticker shock among both first-time buyers and phone owners looking to upgrade.
Speculations are rife that the Samsung Galaxy Note 6 might release prior to the IFA Berlin event in August, although nothing can be confirmed at the moment.
And Samsung will face a fresh challenge following the launch Thursday of Huawei’s P9 smartphone – the Chinese maker’s first foray into the high-end segment of the market where it hopes to take on the iPhone and Galaxy S handsets.
Lee, however, added that Samsung will still face challenges from foreign-exchange fluctuations and the increase of marketing costs.
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Samsung Electronics is set to release its final first-quarter earnings report around the end of this month.
