Samsung in record quarterly profit on smartphone boost

http://www.bbc.co.uk/news/business-23460756

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Samsung Electronics has reported a record quarterly profit boosted by growing smartphone sales and a surge in earnings at its display panel division.

Net profit was 7.8 trillion won ($7bn; £4.5bn) in the April to June quarter, a 50% jump from a year ago.

It said the launch of new models such as the Galaxy S4 helped boost sales of smartphones during the period.

But it warned that the pace of growth of smartphone business, a key driver of its recent success, may slow down.

"Entering into a typically strong season for the IT industry, we expect earnings to continue to increase," said Robert Yi, head of investor relations at Samsung.

"However, we cannot overlook delayed economic recovery in Europe and risks from increased competition for smartphone and other set products,"

'The big question'

The success of its smartphone business has seen Samsung displace Nokia as the world's biggest mobile phone maker.

Its market share in the sector has risen sharply. According to research firm Strategy Analytics, Samsung accounts for almost 95% of the Android smartphone sector's profits.

However, in recent weeks various analysts and brokerages have voiced concern over whether the company can continue to sustain high growth.

They have cited increased competition, saturation in key markets and the emergence of low-cost smartphone devices from China as key threats.

The fear among many is that Samsung may have to lower the prices of its products - which may hurt its earnings.

Analysts say Samsung needs to introduce new and innovative products if it is to maintain its market share and keep charging a premium price.

"The big question right now is whether they have got that card up their sleeve," Bryan Ma of research firm IDC told the BBC.

"What is the killer product that they have in the pipeline that is going to help sustain this growth," he added.

Display panel earnings

Samsung, the world's biggest TV maker, also reported a big jump in its earnings in its display panel division.

The company said the unit's operating surged 46% in the three months to June from the previous quarter to 1.12 trillion won.

Earnings were boosted by strong demand for high value-added panels for IT as well as TV panels sized 60-inch and over.

The South Korean firm said that it also strengthened its product line-up in the US and China to to help boost its sales in those markets.

However, it warned that "uncertainties over Europe's economy and Chinese subsidies for electronics goods could possibly hinder growth" in the coming months.