Samsung profit leap threatens Apple

26 April 2013
By Edd Gent
Mobile version
Share |
Models pose with Samsung's S4 smartphone at its launch event at the company's headquarters in Seoul yesterday

Models pose with Samsung's S4 smartphone at its launch event at the company's headquarters in Seoul yesterday

Technology giant Samsung saw profits leap by 41 per cent in the first quarter thanks to a surge in sales of its smartphones.

The South Korean company made a net profit of 7.15tn won (about £4.2bn) for the period, up from 5.05tn won a year ago, in a bitter blow for rival Apple, which this week announced its first profit slide in nearly a decade.

According to the figures released today, Samsung's revenues fell slightly on the previous quarter, down 6 per cent at 52.87tn won (about £30.6bn), though profits were up on the last three months of 2012.

The company's thriving smartphone sector has been behind much of its success with its smartphone and mobile communications sales leaping 7 per cent on the last quarter to 32.82tn won (£19bn), accounting for around 75 per cent of the company's profits.

However Samsung predicted that growth in smartphone sales would stay flat in the coming months amid intensifying competition in the lower and middle sections of the market, before picking up in the second half of the year.

Robert Yi, head of investor relations, said: "We may experience stiffer competition in the mobile business due to expansion in the mid to low-end smartphone market."

Samsung's latest smartphone offering, the Galaxy S4, which goes on sale in the UK tomorrow, allows users to control the screen using their eyes is said to pose the greatest threat yet to Apple's iPhone and is expected to give the company another sales boost.

Samsung's positive results will prove a headache for Apple which earlier this week posted profits of £6.27bn, down £1.38bn from the same time last year.

Jan Dawson, an analyst at research firm Ovum, said Samsung's mobile business performed well in the first quarter of 2013, despite the fact that the previous three months are usually the biggest of the year.

She said: "Certainly it looks like year-on-year growth was much higher for Samsung's mobile phone unit than for Apple's iPhone segment. That's a testament to the broad appeal of Samsung's device range compared with the relatively high-end focus of the iPhone.

"It's also helpful that Samsung has device launches throughout the year, which help to keep demand going on a more consistent basis, whereas Apple suffers from strong seasonality.

"It also increased profits significantly both year on year and quarter on quarter in that business unit, in contrast with Apple, although Apple's margins are likely still much higher in its phone business.

"The next quarter should see a rise in marketing spending around the launch of the Galaxy S4, which may impact margins, though shipments should also go up."

Bryan Ma, from research firm IDC Asia Pacific, said Samsung was doing "very well right now", leading to consumer excitement about its devices and wariness among competitors about what it will do next.

"Some of the initial reviews around the Galaxy S4 might have been a little bit mixed, but nonetheless there is still a lot of excitement around it," he told the BBC.

"I think that with everything we have been seeing from them over the past few months, and more importantly going ahead, they are still the competitor to beat."

Latest Issue

E&T cover image 1604

"Should the UK's engineers be in or out of Europe? The IET sets out its official position on the EU referendum this week - will you agree?"

->

E&T jobs

  • Senior Programme Manager

    Network Rail
    • England, London
    • £76800 - £86400 per annum

    Do you possess a track record of taking the lead on large projects?

    • Recruiter: Network Rail

    Apply for this job

  • Professor and Head of the Department of Electrical and Computer Systems Engineering

    Monash University
    • Australia (AU)

    Shape the future direction of a Department which is currently involved in ground breaking innovative research

    • Recruiter: Monash University

    Apply for this job

  • Rail Engineer

    Frazer-Nash Consultancy Ltd
    • Burton, Dorking, Glasgow
    • £ Competitive + Benefits

    Some of the most exciting infrastructure projects in the UK over the coming years are in rail.

    • Recruiter: Frazer-Nash Consultancy Ltd

    Apply for this job

  • Electrical Power & HV Engineers

    Frazer-Nash Consultancy Ltd
    • Bristol, Burton, Glasgow, Gloucester, Plymouth, Warrington
    • £ Competitive + Benefits

    Frazer-Nash is currently embarking on a period of significant growth of our electrical, electronics, control and instrumentation capability.

    • Recruiter: Frazer-Nash Consultancy Ltd

    Apply for this job

  • Control and Instrumentation Engineers

    Frazer-Nash Consultancy Ltd
    • Bristol, Burton, Dorchester, Glasgow, Gloucester, Plymouth, Warrington
    • £ Competitive + Benefits

    Frazer-Nash is currently embarking on a period of significant growth of our electrical, electronics, control and instrumentation capability.

    • Recruiter: Frazer-Nash Consultancy Ltd

    Apply for this job

  • Engineering Open Days

    Atkins
    • Bristol, Epsom and Birmingham

    Meet your new team!

    • Recruiter: Atkins

    Apply for this job

  • Engineering Manager

    Crich Tramway Village
    • Crich, Derbyshire
    • £40,000 PA

    The post holder will be a qualified electrical engineer and have experience in running a workshop and extensive project management skills.

    • Recruiter: Crich Tramway Village

    Apply for this job

  • CONNECTIONS DESIGNER

    SSE
    • MELKSHAM, NEW FOREST, OXFORD, POOLE, PORTSMOUTH, READING AND SLOUGH
    • £33,520 TO £49,645 (SSE7/8) DEPENDING ON SKILLS AND EXPERIENCE

    Due to continued growth, we are looking to recruit a number of Connections Designers in to existing network offices in South Central England.

    • Recruiter: SSE

    Apply for this job

  • Junior PLC Software Engineer

    Siemens
    • Gatwick

    Designs and develops controls SW, prepares engineering calculations, performs analyses and supports factory acceptance tests

    • Recruiter: Siemens

    Apply for this job

  • Electrical Engineer

    Premium job

    Scottish Prison Service
    • Edinburgh, City of Edinburgh
    • £40,654 to £48,579 plus annual supplement of £10,000

    Build Your Engineering Career. The Scottish Prison Service (SPS) is an Agency of the Scottish Government, working in partnership.....

    • Recruiter: Scottish Prison Service

    Apply for this job

More jobs ▶

Subscribe

Choose the way you would like to access the latest news and developments in your field.

Subscribe to E&T