Here's what the Galaxy S7 has done for Samsung's profits

 
Lynsey Barber
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New Samsung S7 Worldwide Unveiling
The S7 boosted Samsung's first quarter (Source: Getty)

Samsung's flagship Galaxy S7 smartphone is already paying off.

The South Korean firm expects a 10 per cent rise in sales for the first three months to March of 6.6 trillion won (£3.9bn), ahead of analyst estimates of around 5.5 trillion won.

Revenues meanwhile were up four per cent to 49 trillion won for the same period compared to last year. The company, which also makes TVs and other electronics as well as semiconductors, did not break down the figures further.

That failed to impress investors, however, as Samsung shares closed down 1.25 per cent, indicating they may not see this bump as a long term turnaround to falling profits.

“The biggest reason for the sharply improved profitability is largely due to much lower marketing spending for the mobile business. The big disparity between the earlier profit estimates and the latest revisions stems entirely from the mobile business. The faster release surely helped but it’s dubious whether the S7 can continue to surprise the market in the longer run,” Dongbu Securities analyst Yoo Eui Hyung told Bloomberg.

Demand for the S7 is "healthy" according to analysts. Sales are as much as 50 per cent higher in some markets, compared to last year's S6 model, according to Counterpoint Research, which estimated 10m of the phones were shipped.

“The US is a key and very strong market for Samsung where there is high percentage of premium devices sold like the Galaxy S7 series. Moving the launch to early March was a great strategy for Samsung," said research director Jeff Fieldhack.

The launch, a month earlier than last year's S6, puts Samsung further ahead of Apple, which is understood to be planning a major flagship smartphone launch, the iPhone 7, this autumn.

Samsung also faces stiff competition in the huge China market from the likes of Huawei and Xiaomi.

"We believe the S7 series will still face an uphill task in China as it will compete against numerous Android flagships with a similar dual edge display such as Vivo’s Xplay5 Elite and new flagships from Huawei — the Ascend P9 and Mate 8 models,” said Counterpoint' China research director James Yan.

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