Samsung Electronics reported a 2.7 per cent year-on-year increase in its first-quarter operating profit as a slight recovery in the chip market helped it to make up for slower sales in its consumer business.
The operating profit of the world's biggest smartphone and memory chip maker in the three months to March 31 rose to 6.4 trillion Korean won ($5.2 billion), according to the company’s preliminary results released on Tuesday. However, it was down 10.6 per cent compared to the previous quarter.
Samsung's first quarter sales rose 4.9 per cent year-on-year to 55tn Korean won but was down 8.1 per cent from the previous quarter, which recorded sales worth 59.88tn Korean won.
Industry analysts attribute Samsung’s positive annual performance in the first quarter to strong chip sales in the past few months as demand picks up from laptop makers due to an increase in remote working.
"They did or likely [are enjoying an] upside from the memory chip recovery," Neil Campling, co-head of Mirabaud Securities' Global Thematic Group, told The National.
Samsung did not reveal its net income or details of how its divisions performed.
It is the first global technology company to report its first quarter earnings estimates for this year – a period that has seen businesses being hit by the coronavirus pandemic.
Analysts said Samsung's smartphone business was impacted in the quarter as people delayed new phone purchases.
Overall smartphone shipments saw their biggest ever plunge in February due to the coronavirus pandemic that first hit China – one of the biggest smartphone markets and a crucial manufacturing hub – before spreading rapidly to the US and Europe.
Global smartphone shipments dropped 38 per cent to 61.8 million units during the month, almost 37.4 million units less than the same month last year, according to Strategy Analytics.
South Korea-based Hana Financial Investment estimated that Samsung’s smartphone sales during the first quarter would be around 62.2 million units, 9.3 million lower than the same period last year.
Although its rival Apple have warned investors of potential disruption to its supply chain from the coronavirus outbreak, Samsung said it is ensuring there is minimum impact to its operations.
"There is no impact on the supply chain and sales in the near term. We have enough stock shipped to meet our customers' demands," Osman Albora, head of the IT and mobile division at Samsung Gulf Electronics, told The National in an interview last month.
In January, Samsung also appointed Roh Tae-moon - one of its youngest presidents – to head its smartphone business as it looks to snare market share from its rivals Huawei and Apple.
Samsung has also launched its new S20 series and a foldable phone, in February, to attract premium customers.