South Korean conglomerate Samsung Electronics Co. Ltd. (SSNLF.PK, SSNNF.PK,SMSN.L) reported late Thursday a 30 percent year-over-year drop in profit for the first quarter, hurt primarily by lower semiconductor memory prices and reduced profitability in LCD panels and TV sets.
The company expects the tough business conditions to continue in the second quarter on lingering worries about the global economy and tight competition in consumer electronics and the mobile businesses.
"A difficult business environment remained in the first quarter, due to rising costs of raw materials, uncertainties in the financial market in Europe, and the devastating earthquake in Japan," Samsung said in a statement.
However, the company added that it will respond to such challenges by enhancing cost competitiveness, launching new smartphones and tablet PCs, as well as increasing sales focus on premium LCD panels and TVs.
Samsung reported a net profit of 2.78 trillion won for the quarter, down 30 percent from 3.99 trillion won in the prior-year quarter, and down from 3.42 trillion won in the preceding fourth quarter.
Total sales increased 7 percent to 36.99 trillion won from last year's 34.64 trillion won, but was down from 41.87 trillion won in the prior quarter.
Total operating profit dropped 33 percent to 2.95 trillion won from last year, with operating margin contracting 470 basis points to 8 percent.
Earlier in the month, Samsung had estimated first-quarter sales of 37 trillion won, with an operating profit of 2.9 trillion won. Sales at the semiconductor division increased 12 percent, with memory sales growing 5 percent, and system LSI chip sales doubling amid stronger demand for NAND products used in smartphones and tablet PCs that more than offset weak memory demand.
Display panel division's sales declined 5 percent, with LCD panel sales dropping 12 percent, and LCD shipments declining 8 percent on weak seasonality.
Meanwhile, quarterly sales at the telecommunication division increased 19 percent from last year. Handset shipments grew 9 percent to 70 million units, with Smartphone sales increasing 18 percent to boost segment profit.
Digital media and appliances division sales grew 5 percent, with visual devices sales edging up a percent, and appliances sales advancing 13 percent. Flat panel TV shipments grew 5 percent year-over-year to 8.8 million units.
Looking ahead, Samsung expects demand for LCD panels to begin to gather momentum in the latter part of the second quarter, and sees single-digit growth in mobile handset demand sequentially.
Samsung forecasts that the challenging business conditions will persist in the second quarter. Further, the company said the earthquake in Japan would have only a limited impact on its supply chain.
Samsung will introduce the new GALAXY SII during the second quarter, and will also expand its tablet portfolio with the introduction of the GALAXY Tab 10.1.
For the remainder of 2011, Samsung said sales of flat panel TVs are expected to remain slow in advanced countries, with emerging markets forecast to take up 55 percent of total demand by year-end.
Samsung shares fell 13,000 won or 1.44 percent in Friday's regular trading and is currently trading at 887,000 won on the Kospi on a volume of 0.22 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.