Samsung expects record first quarter profits

The logo of Samsung Electronics is seen at its office building in Seoul South Korea

The logo of Samsung Electronics is seen at its office building in Seoul South Korea

Samsung Electronics reported a 58% surge in profit, topping projections as demand for its memory chips remained strong enough to outweigh concerns about display supplies to Apple.

Samsung shares fell after the announcement as Wall Street forecast similar or lower profit in the second quarter, due to slower growth in DRAM chip prices and higher marketing costs for the flagship Galaxy S9 smartphone.

Total revenue are projected at ₩60 trillion ($56 billion), adding 18.7 percent from ₩50.55 trillion in the same quarter previous year.

Samsung Electronics yet again broke its quarterly profit record on the back of red-hot semiconductor sales and the Galaxy S9 smartphone's launch last month.

Markets were advised that Samsung brought in around 60 trillion won ($56.4 billion) in sales and 15.6 trillion won ($14.7 billion).

Samsung has released its earnings guidance for the first quarter of 2018, and it's another record for the company.

Samsung shares fell as much as 2.7 percent on Friday before paring losses to close down 0.7 percent, compared to a 0.3 percent drop on the broader market. Analysts increased their forecasts of Samsung's memory chip profit this year as demand for data centers and servers increased the prices of the memory chips called DRAM.

"Memory chips are the loyal son of Samsung", said Lee Jae-yun, an analyst at Yuanta Securities.

While the chip business underpinned Samsung's profit growth, the mobile business - which accounted for 40 per cent of 2017 revenue - appeared to have made a surprisingly solid contribution to first-quarter earnings, analysts said.

Samsung's sales boost comes as its rival Apple has been struggling to sell its flagship iPhone X, and Chinese competitors like Huawei have not released any major new models recently.

Worldwide smartphone shipment volumes shrank for the first time in 2017, and Samsung is coming under increasing competition from the likes of low-priced Chinese rival Xiaomi.

Samsung's announced operating profit was 1 trillion won more than the market's consensus.

Samsung also released its new Galaxy S9 smartphone five weeks before the S8 was released past year, which likely increased the mobile communication division's operating profit over 2017's figure.

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