Samsung Electronics, the world's largest smartphone manufacturer, is likely to exceed the market expectations in terms of quarterly earnings this year. Unnamed sources revealed to South Korea's Korea Economic Daily Wednesday that the South Korean tech titan is likely to report its operating profit for January-March quarter at more than 6 trillion won ($5.2 billion).
According to the paper, the strong sales of Samsung's latest flagship smartphones – the Galaxy S7 series – and a weaker South Korean won contributed towards the high first-quarter earnings of the company, Reuters reported. The foreign exchange conditions favoured Samsung as the won weakening since the beginning of this year added billions in Samsung's operating profit during the quarter.
Industry analysts remained skeptical about Samsung's profitable quarter this year. Initially, market watchers expected Samsung to report its first quarter profit at as low as 4 trillion won due to the challenges in its chip and home appliances businesses, the Korea Herald reported.
But the outlook of Samsung's Q1 profit improved after an industry tracker FnGuide reported 5.17 trillion won in the company's favour during the Jan-March period. The Galaxy S7 series, which was globally launched this month, improved the estimations as the latest flagships recorded strong sales.
According to media reports, the Galaxy S7 and S7 Edge smartphones are selling 2.5 times better than their predecessors, the Galaxy S6 series.
In the previous quarter (Q4 2015), Samsung reported a massive 40 percent decline in net profit to 3.2 trillion won ($2.65 billion) from a year earlier. The company's two core businesses, smartphones and semiconductors, took a major hit as the global demand for electronics dipped. Hence, the company had said it expected the profit to remain flat during the first half of 2016 before regaining control over the market in the second half.
"Expecting challenges in 2016 to maintain earnings due to a difficult business environment and slowing IT demand, the company will strive to improve performance in the second half, by capitalizing on strong seasonal demand for set business products and enhancing the product mix in components business," Samsung said in a statement earlier this month.
Samsung is expected to report its earnings guidance on April 7, 2016.