SEOUL (dpa-AFX) - South Korean conglomerate Samsung Electronics Co. Ltd. (SSNLF) on Wednesday reported a 39 percent year-over-year decline in first-quarter profit, reflecting weak sales of smartphones amid intense competition.
However, sales and operating profit for the quarter came in slightly above Samsung's guidance released earlier in the month.
Suwon, South Korea-based Samsung has now reported its sixth consecutive quarter of decline in earnings amid the continued slowdown in its core smartphone business as the company grapples with increased competition.
However, it has seen sequential growth in operating profit, amid improved sales of its chip business and a pickup in the smartphone sales.
Samsung, the world's largest smartphone maker by shipments, is continuing to lose market share of its flagship handset business to U.S. rival Apple, Inc. (AAPL) as well as Chinese brands.
Samsung has made a shift in strategy to to reverse the downslide by making more low-tier smartphone lineups to retain market share from the Chinese brands.
In early March, Samsung launched its new flagship Galaxy S6 smartphone in two forms: regular and edge. The success of these latest Galaxy flagship smartphones is pivotal for Samsung's future after the company reported weak results for the December quarter.
The world's largest technology firm by revenue reported net income for the first quarter of 4.63 trillion won or $4.3 billion, down from 7.57 trillion won in the prior-year quarter. Net income also declined 13 percent from 5.35 trillion won in the preceding fourth quarter.
Total sales for the quarter decreased 12 percent to 47.12 trillion won from last year's 53.68 trillion won, and also declined 11 percent from 52.73 trillion won in the prior quarter.
Total operating profit declined 30 percent from last year to 5.98 trillion won, with operating margin contracting 310 basis points to 12.7 percent. However, operating profit rose 13 percent from the preceding quarter.
Earlier in the month, Samsung had estimated first-quarter sales of about 47 trillion won, with an operating profit of 5.9 trillion won.
Quarterly sales at Samsung's telecommunication division decreased 20 percent to 25.89 trillion won, with a 20 percent drop in mobiles sales. Meanwhile, operating margin improved sequentially to 10.6 percent from 7.5 percent in the preceding fourth quarter, amid lower marketing expenses and expansion of new mid/low-end smartphones.
Looking ahead to the second quarter, Samsung sees earnings improvement in the mobile phone segment, led by increased high-end sales with the Galaxy S6 global expansion.
Sales at the semiconductor division, once the main source of income for the company, grew 9 percent to 10.27 trillion won as demand remained solid despite seasonality, with memory sales rising 32 percent.
Display panel division's sales also improved 12 percent to 6.85 trillion won, as OLED shipments increased and premium TV panel sales expanded.
Digital media and appliances division sales declined 9 percent last year to 10.26 trillion won, with visual devices sales down 16 percent.
Looking ahead to the second quarter, Samsung expects its overall earnings to increase compared to the previous quarter, despite an expected growth in marketing expenditures.
For fiscal 2015, Samsung expects product and marketing competitions to intensify amid a slowdown of smartphone growth.
The semiconductor business is projected to sustain strong growth due to expected demand for server DRAM and mobile DRAMs. OLED shipments are also projected to increase, driven by new set product launches and expansion of external sales.
Samsung shares are currently trading up 3,000 won or 0.22 percent in Wednesday's regular trading session at 1,370,000 won on the Kospi on a volume of 0.14 million shares.
Copyright RTT News/dpa-AFX