Reduced Reduction
Samsung Electronics recorded 5.9 trillion won (US$5.41 billion) of operating profits in the first quarter, exceeding the market forecast, which was between 5.2 trillion (US$4.76 billion) to 5.7 trillion won (US$5.22 billion).
The company’s operating profits are expected to reach 6 trillion won (US$5.5 billion) to 7 trillion won (US$6.41 billion) in the second quarter when the Galaxy S6 will be sold.
Its sales amounted to 47 trillion won (US$43.06 billion), a 10.87 percent decrease from 52.73 trillion won (US$48.31 billion) in the previous quarter and a 12.44 percent decrease from 53.68 trillion won (US$49.18 billion) in the previous year. However, the operating profits increased by 11.53 percent from 5.29 trillion won (US$4.85 billion) in the fourth quarter last year.
Samsung Electronics reduced the number of executives and got rid of unnecessary businesses and organizations last year in order to streamline the overgrown organization. Also, the company reorganized the business in a bid to focus on securing core ability.
In particular, the semiconductor business saw the positive effect of its process conversion. As the company increased the share of 20 nm DRAM chips, which began mass production from March last year, it was able to cut costs compared to its competitors and increase production.
Starting last year, Samsung Electronics has focused on expanding the share of the 20 nm process in its DRAM business. The company is planning to push the figure to 50 percent this year.
It is estimated that the company was not yet able to get out of the red in the system semiconductor sector, largely due to the fact that the consignment production output of application processors for Apple’s iPhone is not included in the first quarter, and the Exynos 7420, which is mounted on the Galaxy S6, will be included in the second quarter results as well.
Samsung Electronics’ operating profits in the IT Mobile (IM) Division also recovered to the level of 2 trillion won (US$1.83 billion). Even though the company recorded 6.43 trillion won (US$5.89 billion) of operating profits in the IM Division in the first quarter last year, the figure plunged to 1.75 trillion won (US$1.6 billion) in the third quarter and slightly improved to 1.96 trillion won (US$1.8 billion) in the fourth quarter. The company recorded an early 2 trillion won (US$1.83 billion) of operating profits in the first quarter this year, according to data.
Although the Consumer Electronics division was expected to record losses in the TV business due to the slump in the global TV market, it maintained a surplus, which was its original target.