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Samsung reports $6.24B profits from mobile and communications division in Q1 2014

Samsung LogoSamsung Electronics reported operating profits of $8.24 billion (8.49 trillion Won) for the first quarter of 2014, with bulk of it coming from the IT & Mobile Communications Division. This group of the company reported profit of $6.24 billion (6.43 trillion Won) from revenues of $30.45 billion (31.36 trillion Won).

Mobile division

Out of the total IM earnings, the mobile business accounted for $30.45 billion (31.36 trillion Won). Revenues from mobile segment reduced 4% from the previous quarter from $31.62 billion (32.56 trillion Won) reported in Q4 2013.

Although market demand for electronics devices such as smartphones and tablets in the January-March quarter is traditionally slow, Samsung said the profit margins were driven by strong demand for smartphones and efficient management of marketing expenses, as well as a net positive impact from adjustments to reserve items that accounted for 1% of the mobile unit’s revenue.

Operating profits for the IM division jumped 18 percent compared with the previous quarter thanks to steady smartphone shipments, reduction in marketing expenditures and a positive impact from adjustments of one-off expenses.

Looking at the tablet business, the company maintained solid tablet sales momentum by shipping nearly 13 million units during the slowest quarter and reinforced its mid to high-end lineup, including launches of the premium GALAXY Note PRO and GALAXY Tab PRO devices equipped with 12.2-inch displays, office functionalities.

Samsung expects Galaxy S5 to surpass sales of Galaxy S4 based on the initial response it has received in the market. The company is banking on this device to to increase the sales of Samsung devices despite the weak seasonality in the upcoming quarter.

Samsung also said it will respond to rapid demand growth in China’s LTE market. The company also said in its earnings report that it will gradually increase the share of wearable devices business to its entire earnings as this segment grows.

Other business

– Samsung reported $1.89 billion (1.95 trillion Won) in profit from revenues of $6.1 billion (6.19 trillion Won) from the chips and semiconductor business. The company will ramp up production of 14nm process in this quarter so that the company can make the first 14nm chips by the end of the year.

– Display panel division of the company reported a loss of $77.68 million (80 billion Won) from revenues of $5.92 billion ($6.10 trillion Won).During Q1 2014, LCD market experienced a quarter-on-quarter decline in demand for TV and tablet panels. The results were also affected by cost increases due to ramping-up of production in China. The company hopes that the demand for LCD panels will increase in the US around World Cup time. It is hoping that this demand will make up for the other issues the company has faced.

– Consumer electronics division, encompassing the Visual Display, Digital Appliances, Printing Solutions and Health and Medical Equipment businesses, reported profits of $184.49 million (190 billion Won) form revenues of $10.99 billion (11.32 trillion Won), despite an overall decrease in sales by 21%. The Visual Display business accounted for $7.175 (7.39 trillion Won) of earnings. Samsung expects demand for UHD TVs to drive meaningful growth in the global TV market.

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