Samsung profits, sales slip in Q1

By Colleen Taylor, Contributing Editor -- Electronic News, 4/13/2007

Samsung Electronics Co. Ltd. started off its fiscal 2007 on a disappointing note, with both its Q1 income and revenues falling from the previous quarter's levels.

In its Q1 financial report released today, the Seoul, South Korea-based company posted a net profit of $1.71 million ( 1.60 trillion Korean won), on revenue of $15.43 billion (14.39 trillion won)—a three percent slide in profit and an eight percent slide in sales from its significantly stronger Q4 2006, when Samsung made net income of $2.5 billion (2.35 trillion Korean won) on revenue of $16.68 billion (15.69 trillion Korean won.)

Year-over-year, Samsung's Q1 net profit was a 14.8 percent drop from the $2.01 million (1.88 billion won) in net profits it posted in Q1 2006. However, the company's Q1 revenues were not as negative in year-over-year terms; sales were a three percent boost from Q1 2006's sales of $14.96 billion ( 13.96 trillion won).

Meanwhile, Q1's operating profit showed both year-over-year and sequential declines. Samsung posted Q1 operating profit of $1.26 billion (1.18 trillion won), down 42 percent from the $2.66 billion ( 2.05 trillion Korean won) operating profit it made in Q4 and down 27 percent from the $1.72 million (1.61 trillion won.)

Operating profit of Samsung's semiconductor business was $579 million (540 billion won), down a whopping 68 percent from Q4 and down 52 percent year-over-year. The semi business posted Q1 revenue of $4.8 billion ( 4.48 trillion won), down 16 percent from Q4 but up three percent from Q1 2006.

The company chalked up the quarter's performance to overall weaknesses in the industry. "There were many difficulties in the first quarter due to a sluggish demand for key products and a decline in their prices due to an oversupply in a seasonally weak period of the IT Industry," Samsung Electronics' investor-relations team said in a statement.

The team added, however, that it expects market conditions to recover in the second half of the year.