Samsung shows signs of emerging from earnings slump

Samsung's two new phones, the Galaxy S6, top left, and the Galaxy S6 Edge, to right.
Samsung's two new phones, the Galaxy S6, top left, and the Galaxy S6 Edge, to right. AP Photo/Bebeto Matthews, File

SEOUL, Korea, Republic Of – Samsung’s quarterly operating earnings fell 31 per cent from a year earlier but the drop wasn’t as big as expected in a sign the smartphone and computer chip giant may be emerging from its profit slump.

The company on Tuesday estimated its January-March operating profit at 5.9 trillion won ($5.4 billion), exceeding the average 5.5 trillion won forecast in a FactSet survey of analysts.

Samsung did not give a breakdown of its financial performance but analysts said robust demand for its mobile chips and improvements in its smartphone business were behind the relative improvement. It will release its full quarterly results later this month.

READ MORE: Samsung looks to rebound from disappointing sales with new Galaxy S6 phones

The company’s operating profit was an improvement from the previous two quarters when its mobile business, which accounts for two-thirds of Samsung’s income, suffered from a sales slowdown. Samsung estimated that its sales fell 12 per cent to 47 trillion won ($43 billion) during the first quarter.

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Analysts believe the South Korean company’s profits hit bottom during the third quarter.

They expect a recovery in Samsung’s bottom line in the current quarter as the company is set to launch the latest version of its flagship smartphone, the Galaxy S6, on Friday.

After criticism that its phones look cheap and are too complicated to use, Samsung ditched plastic, using aluminum and glass for the new flagship smartphone’s body. The company also removed many apps that were installed on the phones that critics said cluttered screen space without being useful.

READ MORE: Here’s how the Samsung Galaxy S6 compares to the iPhone 6

Solid demand for semiconductor devices that are used as components for mobile gadgets will continue to help drive a recovery in Samsung’s profits, according to analysts.

Samsung is the world’s largest maker of memory chips. For the upcoming Galaxy S6 smartphone, the company is supplying its own mobile processor that works as the brain of the phone.

Samsung’s share price was unchanged in Seoul trading.

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