Samsung financial report from the first quarter of 2021 – 45% increase in operating profit
Samsung’s operating profit showed an increase of more than 45 percent compared to the same time last year, which Samsung attributed to strong sales of smartphones and consumer electronics. On the other hand, Samsung’s income from semiconductors and displays has decreased, which has been well compensated by smartphones and consumer electronics. According to Samsung, the seasonal decrease in the earnings of the semiconductor business, despite the stable supply of memory, is related to the destruction of the production process at the Austin, Texas factory on the one hand, and the downward trend in the price of NAND memory on the other hand, as well as the initial costs of establishing new production lines by migrating to a new architecture. The advanced node has also influenced this result.
In the following, we review the details related to the performance of Samsung’s various divisions in the recent quarter.
IT & Mobile Communication
Technology Department Information and communication with Samsung company, whose smartphones are also In this quarter, it has achieved a revenue of 29.21 trillion won and its operating profit has been announced at 4.39 trillion won. For comparison, it is enough to know that Samsung earned and operating profit of 26 and 2.65 trillion won respectively at the same time last year. and thus the positive conditions of this collection are evident from the numbers. According to Samsung, although the market demand is decreasing compared to the previous quarter due to weak seasonal conditions, the overall demand for the company’s products in this sector is improving compared to the previous year when the market was facing the effects of the coronavirus.
The infrastructure of the positive conditions of this sector from Samsung’s point of view to the positive performance of the series S21 and mid-range phones belong to Galaxy A, and among them other devices of the Samsung ecosystem including tablets, personal computers and wearables are also growing. The profitability of this part has played a role. Samsung’s forecast for the next quarter is to increase sales of new Galaxy A series phones, including A72 and A52 belongs, and the same applies to tablets, wearables and Galaxy Book computers. On the other hand, the reduction of the impact of new products for flagship models and the lack of supply of parts will probably lead to a decrease in the quarterly income of the mobile communications business.
Semiconductors and display panel
The Device Solutions department in the Samsung collection consists of two parts: Semiconductors and Display Panel or DP. Samsung’s semiconductor business achieved 19.01 trillion won in revenue this time, and its operating profit reached 3.37 trillion won. Samsung’s income in this area reached 17.64 trillion won last year, but with a profit of 3.99 trillion won, it had better conditions than this year. Samsung attributes the decline in profitability in this segment to the downward trend in NAND memory prices and the initial costs associated with establishing new production lines, despite good demand from servers and mobile products.
In the subcategory of DRAM memories, the demand in the mobile sector has been very strong despite the weak seasonal conditions due to the supply of new models by manufacturers and large Samsung customers and the increase in the penetration of 5G smartphones, and in the PC sector due to the routine of online activities for Global customers are facing a positive trend.
In the subset of NAND memories, the demand from the mobile sector is still at a very high level, relying on the strong sale of smartphones, and the SSD memories of servers have also faced more demand than the previous quarter. For the second quarter, Samsung predicts a significant improvement in earnings due to favorable business conditions, the main reason of which should be seen in strong demand in all sub-groups.
The income and operating profit of the second sub-set of this part, i.e. Display Panel Business, reached 6.92 and 0.36 trillion won, respectively, both of which have decreased compared to the previous quarter. Samsung attributed the decrease in revenue from the mobile display segment to chip shortages, apart from weak seasonal conditions, which had a significant impact on the production of Samsung’s main customers. Of course, the income of this collection has increased compared to the same time last year, as a result of the expansion of the adoption of OLED screens from flagships to low-end phones. Samsung’s forecast for the second quarter is a decrease in demand for mobile displays compared to the previous quarter, where end customers are likely to postpone their purchases to the later months of the year.
The Consumer Electronics Division, which consists of two subgroups of Visual Display and Digital Appliance, this time It has achieved an impressive revenue of 12.99 trillion won and an operating profit of 1.12 trillion won, which is a significant increase compared to the revenue of 10.3 trillion won and an operating profit of 0.45 trillion won at the same time last year.
Demand for Samsung TVs compared to the previous quarter after reaching It has decreased to a big peak at the end of the year, but compared to the previous year on this day, it has experienced a clear increase due to the stability of demand in advanced markets. Samsung’s forecast for the second quarter belongs to the annual increase in demand for TVs; Which will not affect the holding of important sports events such as UEFA Euro 2020 and the Summer Olympics. Of course, the continued presence of the coronavirus with new waves around the world is still considered a threat in this field for new lock-downs.
Samsung in the digital home appliance sector is from its decision to focus on the global expansion of the Bespoke product line and the strength of its capabilities. Online sales and B2B speak and at the same time remind the continuation of doubts in this area.