Sales of its smash-hit Galaxy S3 handset helped Samsung post bumper quarterly profits, but the firm sounded a cautious note about sales of its forthcoming S4 flagship.
Samsung reported that sales for the first three months of 2013 of KRW52.87tr (£30.74bn) up from £26bn in the year-ago quarter. Profits at the Korean titan were up more than 40 percent year-on-year to £4.2bn from £2.9bn in Q1 2012.
The bulk of its profits came from its smartphone businesses, with the group contributing more than 90 percent of all profits – £3.78bn. Samsung said sales of its Galaxy S3 and Galaxy Note 2 handsets delivered most of those profits.
But it also sounded a note of caution about the likelihood of the forthcoming Galaxy S4 – due to land in the UK this weekend – repeating that success.
“In the second quarter global demand for smartphones is forecast to dampen, compounded by heightened competition,” Samsung noted in its earnings release.
“We may experience stiffer competition in the mobile business due to expansion of the mid- to low-end smartphone market,” added Robert Yi, head of investor relations at Samsung.
While the Galaxy S4 is targeting the high-end of the smartphone market, Samsung is no doubt aware that Android rivals such as HTC and Sony are producing very capable handsets for the more cost-conscious end of the market. That is putting pressure on the S4's margins.
Samsung's bumper smartphone profits were helped by a dramatic reduction on marketing spend, in keeping with the phasing out of S3 promotions in favour of the Galaxy S4. In the coming quarter, Samsung will be splashing to promote its latest handset. Meanwhile, Samsung predicted that demand for 4G-capable smartphones would help drive sales of its smartphones.
Note: figures above correct at time of conversation on 26 April.
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