Business / Corporate

Samsung estimates 2.7% rise in first-quarter operating profit

AFP-jiji

Samsung Electronics’ operating profits inched up 2.7 percent in the first quarter, the world’s biggest manufacturer of smartphones and memory chips estimated Tuesday.

Operating profit during the January-March period was expected to be around 6.4 trillion won (¥570 billion; $5.2 billion), up 2.7 percent from a year earlier, Samsung said in an earnings estimate.

Sales were 55 trillion won, up five percent year-on-year.

But a tough road is expected ahead for the South Korean firm, with the world economy forecast to shrink because of the coronavirus pandemic, triggering layoffs and dampening consumer demand.

The global economy is expected to contract 1.9 percent this year, according to Fitch Ratings, with steeper negative growth of 3.3 percent seen in the United States.

Global smartphone sales dropped 14 percent in February year-on-year, with China seeing a nearly 40 percent decrease, according to Hong Kong-based market researcher Counterpoint.

When compared to the October-December period of last year, Samsung’s operating profit plunged 10.6 percent, illustrating how far the novel coronavirus has affected its business around the world.

The firm’s share price reached a record high in January but has since fallen nearly 20 percent amid concerns over the coronavirus pandemic and its economic repercussions.

Its shares opened 2.5 percent higher on Tuesday.

Samsung Electronics is crucial to South Korea’s economic health.

It is the flagship subsidiary of the giant Samsung Group, by far the largest of the family-controlled conglomerates known as chaebol that dominate business in the world’s 12th-largest economy.

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