South Korean technology giant Samsung Electronics grew 46.3 percent in first-quarter net income on Thursday, driven mainly by strong sales of smartphones and home appliances due to continued demand for staying at home.
The company is a subsidiary of the giant’s flagship Samsung a group, by far the largest of the family-run empires known as the Chaebols, that control business in South Korea, the world’s 12th largest economy.
The conglomerate is crucial to the economic situation in the South – its total turnover is one-fifth of the gross national product.
According to Samsung Electronics, net income in January-March increased 46.3 percent year-on-year to KRW 7.1 trillion (approximately SEK 47,460).
“Robust sales of smartphones and consumer electronics outperformed lower revenues in semiconductors and displays,” the company said in a earnings report.
The figures came days after Samsung’s controlled Lee family announced plans to pay more than $ 10 billion (approximately Rs 7,4100) in inheritance taxes after the death of President Lee Kun – one of the world’s largest settlements of all time – and Donate a huge art collection, according to including Picasso and Monet.
coronavirus has caused havoc in the global economy, deadlocks and travel bans around the world for many months.
But the pandemic – which has killed more than two million people worldwide – has also seen many technology companies, including Samsung, grow.
Working at a coronavirus-driven home has increased demand for Samsung-based devices and home appliances such as televisions and washing machines.
“Pent-up demand has led to the growth of home appliances,” said James Kang, a senior researcher at Euromonitor International.
“But as the coronavirus situation improves with the distribution of vaccines, home appliance growth will be slower than in 2020 as people spend more time outdoors,” he added.
Operating profit rose 45.4 percent to SEK 9.4 trillion (approximately SEK 62,860), while sales increased 18.2 percent to SEK 65.4 trillion (roughly SEK 43,373,355).
According to analysts, the company has enjoyed a particular momentum in its deployment Galaxy S21 series in January, more than a month ahead of the ticket product’s usual annual release schedule.
“Samsung remains the largest supplier, shipping 77 million smartphones worldwide in the first quarter, up 32 percent from the previous year,” said Neil Mawston, CEO of Strategy Analytics.
“Samsung’s recently launched more affordable A-Series 4G and 5G phones, as well as the previously launched Galaxy S21 series, combined stable performance during the quarter.”
But this growth could be hampered in the second quarter as market demand caused by the global chip shortage crisis and pandemic declined, said Counterpoint Research researcher Jene Park.
“In Samsung’s case, its main components are sourced internally, so its production is expected to be relatively steady compared to other companies,” Park told AFP.
“However, the aftermath of COVID-19 will affect Samsung’s second-quarter results in its largest markets, such as India,” he added.
According to market monitoring in Taipei, TrendForce, the global chip manufacturing industry had expected to see record revenues this year as the household remained at home.
But power outages in the U.S. state of Texas caused by a severe winter storm shut down semiconductor factories clustered around Austin in February, including Samsung.
“Austin’s production line will be fully normalized in the second quarter,” Samsung said. South’s Yonhap news agency reported that the company could suffer around KRW 400 billion (about SEK 2,680) due to the plant’s monthly shutdown.
The company’s de facto director, Lee Jae-Yong, the son of the late chairman, was arrested in January for an explosive corruption scandal that overthrows former President Park Geun-hyen.
He also has a separate trial of the charges, including manipulating stocks to ensure a smooth succession of power.
According to experts, a managerial vacuum can hamper a company’s decision-making on future large investments that have been key to the company’s rise.
Earlier this week, five major South Korean corporate groups apologized to the President’s Blue House for national economic reasons.
Shares of Samsung Electronics fell 0.24 percent in an early Seoul transaction.