April 29—Samsung released its final first-quarter earnings results today, which beat the preliminary projections it released earlier this month. Though the manufacturer recorded a 5.6 percent year-over-year increase in revenue due to improved chip sales, the firm’s smartphone and appliance business contracted because of COVID-19. In addition, the company forecasts an overall second-quarter decline in income due to the coronavirus pandemic.
Samsung’s Q1 Financial Results
In Q1 2020, the South Korean electronics giant recorded an operating profit of ₩6.45 trillion ($5.31 billion) against revenue of ₩ 55.33 trillion ($45.56 billion). As such, the corporation improved its sales from Q1 2019, and the income estimate it offered April 6. The conglomerate also increased its operating profit by four percent year-over-year, thanks in large part to robust PC, data center, and mobile component shipments.
In a press statement, Samsung indicated its substantial semiconductor revenue of ₩17.64 trillion ($14.52 billion) came from increased DRAM and SSD purchases from data center clients. As with SK Hynix and TSMC, the firm’s sales got a bump from web service providers needing components to manage coronavirus pandemic prompted usage upticks. Similarly, the company reported recent work-from-home staffers have been buying its chips to upgrade their equipment.
The corporation reported declines in its smartphone and appliance business due to the economic impact of COVID-19. However, the company noted that section of its business remained profitable because of marketing spending cuts and increased sales of its 5G handsets. The firm specifically highlighted better-than-expected sales of its Galaxy S20 line and “solid” performance of the Galaxy Z Flip.
Samsung’s COVID-19 Affected Q2 Forecast
Samsung’s forecast for the second-quarter indicated companywide revenue declines due to the impact of the coronavirus pandemic.
The firm explained it expects a downturn in its display revenue because of consumer anxiety about buying new televisions and smartphones. The manufacturer also stated while it is working to maintain its position as the OLED market leader, it predicts panel demand will remain uncertain through the second half of 2020.
The conglomerate also believes COVID-19 will prompt a “sharp” decrease in handset sales in “most regions.” Samsung said it would address its competition by releasing new foldable and Galaxy Note mobile devices and new mass-market 5G-enabled smartphones. However, the company warned that the continued proliferation of the coronavirus could disrupt its supply chain in the second half.
On the other hand, the corporation has a brighter outlook for its semiconductor segment. The chipmaker estimates server DRAM sales will remain strong in Q2 and the premium stabilization of its NAND business. The company expects the mass production of its 5 nm products to generate a healthy financial return as well.
Bloomberg Intelligence forecasts a dip in Samsung’s overall sales in Q2, but its memory revenue will “stay sturdy.”
Like every other business, Samsung is facing unprecedented uncertainty due to the coronavirus pandemic. But the conglomerate’s diverse offerings and commitment to innovation should see it through the current global health crisis.