Business

Samsung predicts profit recovery on Galaxy S6 phones

A man walks past a billboard showing the Samsung Galaxy S6 and S6 edge at a store in Seoul Image copyright AFP

Samsung has said it expects earnings to rise in the second quarter of the year following the release of its newest Galaxy S6 smartphones.

It said demand for the S6 Edge model had been "better than anticipated".

Its comments came as it posted a fall in first quarter profits after being hit by fierce smartphone competition from Apple and cheaper Chinese rivals.

Net profits for the January-to-March period fell nearly 40% from a year earlier to 4.6 trillion won ($4.3bn).

Revenues were down 12% to 47.12 trillion won, while operating profit fell 30% to 6tn Korean won, in line with estimates released earlier this month.

'Profit growth'

Samsung's mobile division is its biggest business but the company made most of its money last quarter from its chip business, which supplies rival smartphone makers.

The South Korean firm is looking to win back customers through its new premium smartphones such as the S6 Edge, which features a metal body and curved screens.

"Galaxy S6 sales have been going as well as expected, while demand for the Galaxy S6 Edge have been better than anticipated," Samsung Vice President Park Jin-young said during a conference call.

The firm said it had also seen "profit growth, due to increased sales of new middle- to low-end smartphones, all the while decreasing marketing expenditures".

However, Samsung warned that the rest of the year may be challenging.

"Looking ahead to the rest of 2015, despite strong seasonality, competition is expected to toughen for the set business and there is also a risk of weaker demand due to the weak euro and emerging market currencies.

"For the component business, while we expect stable supply and demand conditions, weak demand for set products and increase in LCD panel supply may negatively affect earnings."

Shares of Samsung rose by 1.4% in Seoul following their earnings announcement.

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