Market analysts predicted that when Samsung will announce its earnings guidance for the first quarter of this year, it will forecast an almost 50 percent increase in profit for the quarter. Samsung has officially released its Q1 2018 earnings forecast today and the company has beat market expectations. It forecasts a 57.6 percent jump in profit this quarter compared to the same period last year.
A healthy 57.6% surge in profit
Thomson Reuters polled financial analysts earlier this week and they expected that Samsung will post an operating profit of $13.7 billion in Q1 2018 with the semiconductor business accounting for almost three-quarters of that. Samsung’s expects to post $14.7 billion in profit for the quarter which is a 57.6 percent jump compared to the $8.7 billion operating profit it posted in Q1 2017. It expects revenue for the quarter to touch almost $56 billion.
Samsung has not released performance and division-wise figures so far as that will happen later this month when it reports the full results for the period ending March 2018. However, as expected, the company’s semiconductor division has put it on the path to a very profitable year in 2018 as well. The company has benefitted from rising prices for memory chips and the fact that it’s the dominant supplier of these chips. Analysts predict that Samsung makes 70 cents in operating profit for every $1 of DRAM chips sold.
There were some concerns in the market that the gains made by the semiconductor division would be offset by losses at its display business which has reportedly been impacted by Apple’s decision to cut iPhone X production in half due to sluggish sales. However, that does not appear to be the case.
Even though the forecast looks good on paper the response from the market has been muted, Samsung’s shares actually fell after the earnings forecast was released. It simply confirms the notion that Samsung is heavily relying on its semiconductor business to bring in a major chunk of its profits. Analysts forecast similar or lower profit for Samsung in the second quarter as memory chip prices are expected to fall and Samsung may also incur higher marketing costs for the Galaxy S9.
Samsung will report the full earnings result for the first quarter of this year towards the end of April.