Samsung sees profits up and demand hike

City A.M. Reporter
ELECTRONICS giant Samsung is predicting a surge in flat screen television sales as consumers recover their appetite for spending this year.

The world’s largest semiconducter and flat-screen TV maker, which has forecast a record first-quarter profit of 4.3 trillion won (£2.52bn) and sales of 34 trillion won, predicts it will improve its figures in the next two quarters as it rides a broad global technology recovery.

Better-than-expected demand for personal computers and limited supply growth by smaller players have lifted prices of Samsung’s mainstay DRAM and NAND memory chips and pushed its shares to an all-time high.

First-quarter consolidated operating profit jumped about sevenfold, Samsung said in earnings guidance yesterday, keeping it on track for a record full-year profit. Detailed results are due later this month.

“I believe earnings will peak in the third quarter, but there’s a risk that DRAM prices’ strength may continue and hit demand growth,” said Song Myung-sup, analyst at HI Investment & Securities.

“Among key challenges this year is the foreign exchange rate – not only the won/dollar but also a falling won/yen, as competition with Japan is heating up on flat screen TVs.”

Samsung’s profit guidance is the latest sign that a once-battered global technology industry is recovering, helped by government stimulus spending and product launches such as Apple’s iPad.

Shares in Samsung eased 0.1 per cent to close at 869,000 won after hitting an all-time high of 875,000 won.

Improving industry prospects and expectations of strong earnings have helped add around $16bn to Samsung’s market value, to $114bn (£75bn) in the past five weeks.