Samsung signals 10% jump in profit

Samsung Electronics signalled a 10% jump in quarterly profit on Thursday, suggesting strong early sales of its latest Galaxy S7 smartphone, though there were lingering doubts over whether the strength would last.

The South Korean electronics giant estimated its first-quarter operating profit would beat forecasts at KRW 6.6trn (£4.1bn), well above the KRW 5.6trn estimates by a Thomson Reuters survey of 23 analysts.

Its board did not comment on the performance of the various business divisions, however, and a full breakdown of the results would not be available until later in the month.

Competition from Apple’s latest iPhone SE and Huawei’s forthcoming P9 flagship smartphone were also putting a dampener on market enthusiasm.

HMC Investment analyst Greg Roh said first quarter earnings would be the peak for the company this year, and that marketing costs for the mobile business would push profits lower in the next quarter.

Alpha Asset Management fund manager C.J. Heo added “S7 sales popped in the beginning but could very well fade as rivals launch new models. We have learned from the past.”

There was also concern that Samsung’s decision to launch the S7 a month before Apple and others could have brought forward sales that would have otherwise come in later quarters.

Shares in Samsung gave up earlier gains in Seoul to close down 1.25% at KRW 1,269m.