Financial News

  • 26 January 2013, 10:52

Samsung Q4 Profits Surge 76% Over Smartphones

Samsung has seen its quarterly profits soar by 76%, boosted by the popularity of its Galaxy smartphones, which have outsold the iPhone for a fourth straight quarter.

Net profit for the final quarter of 2012 totaled 7.04 trn South Korean won (£4.1bn), up from 4.01trn a year earlier. 

Sales for the final quarter of 2012 rose 19% over the previous year, and operating income jumped 89%.

Samsung, which overtook Apple as the top smartphone maker last year, said increased sales of the phones were the key source of its profit growth.

Its operating profit from the division that makes and sells smartphones and tablets more than doubled to 5.44trn won in Q4, up from 2.56trn a year earlier.

Most analysts believe Samsung shipped more than 60 million smartphones, including the Galaxy S III and Galaxy Note II, during the three months ending in December, which would put the year's smartphone sales at more than 200 million.

On Wednesday, Apple said it sold 47.8 million iPhones in the quarter.

Hong Kong-based research firm Counterpoint Research said Samsung took 33% market share in the fourth quarter, compared with Apple's 21%.

But Samsung said that it now expects earnings to decline during the current quarter, because of seasonally low demand for consumer electronics, post-Christmas.

The company said the growing strength of the South Korean won may harm profits, with margins reduced as a result.

However, analysts believe that Samsung could be little affected by market demand thanks to its variety of products that range from affordable to expensive devices.

Samsung, which makes dozens of handset models a year and customises them for mobile operators, also sells cheaper smartphones.

Apple, on the other hand, which keeps its iPhone price high, might see iPhone sales plateau in coming years as more consumers snap up cheaper Android phones.

Still, Apple's business has been more profitable because of the high price of the iPhone, which generates a larger profit per sales.

Samsung is expected to introduce a new flagship smartphone in its Galaxy S series as early as April, which analysts say will shore up its bottom line.

The company said consumers seeking to replace its current handset and get a faster wireless connection will drive the demand for new models, easing concerns that sales would slow because of smartphone saturation in developed markets.  

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