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Samsung Q1 Profit Down; Warns Of Q2

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Samsung Electronics Co Ltd (SMSN.L,SSNNF.OB,SSNLF.OB) reported a profit for the first-quarter that declined about 4.27 percent from last year. Quarterly operating profit increased 3.43 percent from last year. Sales also increased about 5.61 percent, due to increasing demand for server and mobile components. The second quarter results are likely to decline as the COVID-19 to impact demand of core products.

Looking ahead to the second quarter, the company expects the memory business to remain solid, but overall earnings are likely to decline from the previous quarter because COVID-19 will significantly impact demand for several of its core products.

For the component business, memory demand is expected to remain robust for servers and PCs as more people work from home, but it is possible the mobile market may soften. Earnings from OLED screens are likely to be weaker due to a stagnant smartphone market.

Sales and profits of set products business, including smartphones and TVs, are expected to decline significantly as COVID-19 affects demand and leads to store and plant closures globally.

In the second half, uncertainties driven by COVID-19 will persist as the duration and impact of the pandemic remain unknown.

Samsung reported that net income attributable to the shareholders of the parent company for the first-quarter declined 4.27 percent to 4.89 trillion Korean won from 5.11 trillion won last year.

But, the company's operating profit rose 3.43 percent to 6.45 trillion won from last year's 6.23 trillion won, with an improved product mix in the mobile business and additional diversification of the Company's customer base in mobile OLED.

In the quarter, foreign exchange movements had little impact on the overall operating profit as the positive effects from a stronger U.S. dollar and euro against the won - felt mainly in the component business - were offset by weakness in currencies in major emerging markets.

Sales for the quarter rose 5.61 percent to 55.33 trillion won from 52.39 trillion won in the prior year.

The Semiconductor businesses posted 17.64 trillion won in consolidated revenue and 3.99 trillion won in operating profit in the first quarter.

The Memory Business saw solid demand in the period, despite weak seasonality and the effects of COVID-19, thanks to continued investments in 5G infrastructure and increased demand from cloud applications related to remote working and online education, the company said in a statement.

The Display Panel Business posted 6.59 trillion won in consolidated revenue and 0.29 trillion won in operating loss for the first quarter. It posted an operating loss due to sales decline of mobile displays.

Mobile display earnings saw a profit decline because of slower sales and lower fab utilization amid weak seasonality.

The IT & Mobile Communications Division posted 26 trillion won in consolidated revenue and 2.65 trillion won in operating profit for the quarter.

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