South Korean conglomerate Samsung Electronics Co. Ltd. (SSNLF, SSNNF) said late Thursday that it expects to report strong year-over-year growth in operating profit and sales numbers for the first quarter, amid continued strong demand for its Galaxy series of smartphones. Quarterly sales are also expected to increase nearly 15 percent from last year.
After setting new record highs for five consecutive quarters, Samsung is set to see a marginal sequential decline in operating profit. Quarterly sales are also expected to decrease sequentially, but is projected to stay above the 50 trillion won mark for the third successive quarter. The company is scheduled to report financial results for the first quarter on April 26.
According to a regulatory filing, Suwon-based Samsung estimates operating profit for the first quarter to be 8.70 trillion won or about $7.7 billion, above analysts' expectations of 8.3 trillion.The forecast is 52.9 percent higher than the company's year-ago quarter operating profit of 5.69 trillion won, and represents 1.6 percent decline from fourth-quarter operating profit of 8.84 trillion won.
The company also projected sales for the quarter to be 52 trillion won, an increase of 14.9 percent from the prior-year quarter's sales of 45.27 trillion won, below Street estimates of 53.0 trillion won. Total sales is seen to decline 7.2 percent from the previous quarter's sales of 56.06 trillion won.
Operating margins for Samsung's flagship mobile devices business, which generates the bulk of profits, have been waning recently due to its smaller presence in the high-end market as well as higher marketing expenses and heated competition. Samsung still lags behind rival Apple, Inc. (AAPL) in the high-end market.
However, Samsung is expected to change the trend after it starts selling its next-generation flagship smartphone, Galaxy S 4 later in the month. The company's increased presence in the high-end market will be crucial for it to maintain margins for its mobile business.
Samsung is also reportedly looking to release two other high-end smartphones in 2013, including a new version of the Galaxy Note and a device using the Intel Corp. (INTC)-backed Tizen operating system.
Meanwhile, Samsung's chip business is expected to show improved earnings, benefiting from solid demand for memory chips used in mobile devices after the launch of new smartphones running on Microsoft Corp.'s (MSFT) new Windows operating system.
The company's earnings are also expected to be boosted by the lower provisions to cover potential costs arising from its patent dispute with Apple. A U.S. district court judge in California on March 1 slashed the damages slapped on Samsung to about $550 million from the original $1.05 billion.
Samsung shares fell 3,000 won or 0.20 percent in Friday's regular trading and is currently trading at 1,503,000 won on the Kospi on a volume of 0.15 million shares.
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