Samsung Earnings: Higher Q2 Revenues Projected Despite 40% Drop In Q1

Samsung Electronics Co. Ltd. (SSNLF) announced its financial results for the first quarter of 2015. The company expects to recover its earnings which dropped 40 per cent in the first quarter ending on March 31.

Samsung expects that it is going attract more users with its new Galaxy S6 smartphones. Its revenue for the first quarter was KRW 47.12 trillion (around AUD 0.06 trillion). This is an 11 per cent decrease quarter-on-quarter (QOQ).

The company predicted on Wednesday that it would be able to revive the 40 per cent decline in earnings. Samsung suffered the decline as consumers had started preferring larger iPhones from Apple Inc. (APPL). They are also switching to cheaper Chinese alternatives. Samsung products are getting more expensive overseas because of the higher exchange rates of South Korean Won.

Samsung may be able to give a significant competition to Apple by making screens and chips for mobile devices on its own. The Galaxy S6 phones received positive reviews and higher demands. Apple earlier posted an increase in its earnings. Samsung had its first gain in a week as its shares rose 1.6 per cent as of 9:49 a.m. in Seoul.

Analyst Greg Roh said that the second quarter would be brighter for Samsung as mobile earnings were expected to improve, largely because of the increased sales of the S6. The HMC Investment Securities Co. analyst said that the pricier Edge device would take up half of the total S6 shipment from May and that would give a strong lift to Samsung’s mobile business.

Samsung said that it expected the earnings to go up in the second quarter. “In the second quarter, the company expects its overall earnings to increase compared to the previous quarter, despite an expected growth in marketing expenditures,” Samsung said, “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.”

According to projections by Korea Investment & Securities Co. analyst Kevin Lee, Samsung is going to sell 46 million units of the S6 models in 2015. The phone featured in the “Avengers: Age of Ultron” movie as well.

Contact the writer: s.mukhopadhyay@ibtimes.com.au