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Samsung first quarter financials beat analyst expectations

Tech giant Samsung has unveiled better-than-expected financial results for the first quarter of 2018, growing by 20 per cent to 60.6 trillion won ($56 billion).

The South Korea-based company said first-quarter revenue was driven by impressive sales across its memory and mobile phone businesses. It follows the launch of the Galaxy S9 earlier this year.

Operating profit for this period also beat expectations, increasing to 5.7 trillion won ($5 billion). Its operating margin came in at 25.8 per cent, an increase of 6.2 per cent compared to previous quarters.

Total capital expenditure for the first quarter was 8.6 trillion yon (78 billion), which included 7.2 trillion (£65 billion) yon for Samsung’s semiconductor business and 0.8 trillion ($7 billion) yon for the display panel segment.

Samsung’s semiconductor business contributed significantly to these results, achieving operating profit of 11.6 trillion won ($10 billion).

It said this was “driven by demand for memory chipsets for high value-added servers and graphics products”

The company explained: “The System LSI and Foundry businesses also contributed to first quarter earnings, backed by strong demand for chips used for smartphones and crypto-currency mining.”

Meanwhile, the mobile unit saw operating profit of 3.77 trillion won ($3 billion). In February, it launched the Samsung Galaxy S9, which has been a hit among consumers around the globe.

However, growth in the area is expected to be short-lived. Samsung warned that profitability is expected to decline in its mobile business due to stagnant sales of flagship models amid, weak demand and an increase in marketing expenses.

In the displays business, Samsung achieved profit of 410 billion won ($379 million), which is considerably lower than its chips and mobile units. The firm said numbers were “affected by slow demand for flexible OLED panels”.

But it said that “earnings for the Consumer Electronics Division are projected to improve due to increased shipments of new products such as QLED TVs and strong seasonal demand for air conditioners”.

Looking to the future, Samsung explained that it will “strengthen its business capabilities” by investing in areas such as artificial intelligence and 5G connectivity.

It said: “The company believes opportunities will widen for the set business, as digital devices become increasingly connected.”

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