Samsung Q1 2016 earnings are up, thanks to the Galaxy S7

JC Torres - Apr 27, 2016, 9:27pm CDT
Samsung Q1 2016 earnings are up, thanks to the Galaxy S7

Finally Samsung can breathe a little easier. After years and countless quarters of depressing financial results, the company is finally reporting an upward turn, at least for its first quarter earnings. Its strategies may be finally paying off and though it is probably too early to tell if it will hold in the future, Samsung is forecasting a more positive outlook for 2016. While most of its businesses, save for display panels, have seen increase in revenues, the relative success of the Galaxy S7 and S7 edge are credited for this positive turn of events.

It was somewhat unusual for Samsung to have launched its first 2016 flagship so close to the year, but now we’re seeing the wisdom of that decision. Launching early allowed Samsung to include the Galaxy S7 in its first quarter report. If the outcome had been negative, it would be able to quickly rectify that in the next two quarters before it launched the next Galaxy Note. Fortunately for the company, it market response was quite positive, and the successful launch of the smartphones boosted both year on year and quarter on quarter earnings of its IT and Mobile Communications business.

Samsung’s other businesses were mostly up as well. Despite the slump in PC sales, its Semiconductor business still saw growth in both DRAM and NAND profits. Its biggest win was in the System LSI which, though showed a decline in quarter on quarter revenue, exhibited solid year on year growth. The 14 nmn process, which it uses for chips like the Exynos and even Qualcomm’s Snapdragon 820, was the main factor in this success.

Its Display Panel Segment, however, suffered the most, though thankfully not enough to pull the company’s revenues down. Unsurprisingly, demand for LCD panels, used in TVs for example, suffered because of low seasonality, even though its Visual Display business actually grew in terms of year on year profits. Conversely, Samsung’s OLED came out strong, offsetting LCDs. This was mostly thanks to demand for the type of display on smartphones, especially its own Galaxy S7.

Here’s is a visual summary of Samsung’s first quarter performance, compared year on year and quarter on quarter. CE (Consumer Electronics) is for its TVs and home appliances, IM (IT & Mobile) is for its smartphones and tablets, Semicon is for its chips, DP (Display Panel) is for its LCD and OLED displays, and DS is for its Device Solutions business.

IR-Earning-Q1-2016

The success has emboldened Samsung to adjust its expectations in a more positive light. In particular, it expects the success of the Galaxy S7 will carry it through the next quarter. It is also expecting 2016 to be kind to its earnings, even after analysts have predicted it will be a slow, maybe even painful, year for smartphones.

SOURCE: Samsung


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