Samsung returned to profitability thanks to strong sales of its Galaxy S7 smartphone, which benefited from smart pricing and release dates
Samsung’s Q1 results were better than expected, with earnings up 12pc to $5.58bn on the back of a 6pc increase in sales to $43.8bn, largely driven by strong demand for the company’s flagship Galaxy S7 smartphone.
Indicating that Samsung is learning from past mistakes, the early release of the S7 – unlike the plodding disaster that signified the rollout of the S6 last year – has paid dividends.
Not only did Samsung price the S7 below that of previous devices, it sandwiched its release between that of the launch of competing products from Apple and Huawei, deftly manoeuvring through the headwinds of global smartphone saturation.
New S7-related product launches on horizon
Samsung’s Semiconductor business also achieved solid earnings despite weak memory demand.
The company’s Display Panel business saw earnings decrease due to a sharp decline in profits from LCD panels, despite earnings from OLED panels being boosted by the Galaxy S7.
Samsung’s Consumer Electronics division achieved earnings growth due to sales of premium TV models such as the SUHD TV and Curved TV in mature markets, most notably in North America.
In the second quarter, Samsung said it expects its solid performance to continue, led by steady earnings in the Mobile and Semiconductor businesses, plus improvement in the CE and Display Panel businesses.
In particular, Samsung is banking on solid earnings to come from expanded sales of the Galaxy S7, along with profits from sales of mid-to-low-end products.
Samsung also hinted at profits being boosted by new model launches – inevitably including a 5.5in Galaxy S7 Plus – in the second half of 2016.
