Samsung profit reached $7.7 billion in the first quarter, up 53%

Samsung Electronics (KRX:005930) posted a first-quarter profit that beat analysts’ estimates, as the largest mobile phone manufacturer in the world managed to increase sales with cheaper Galaxy devices shipped to emerging markets.

The company’s operating profit in the first three months increased by 53%, up to 8.7 trillion won ($7.7 billion) from 5.69 trillion won ($5.03 billion) in the same period of 2012. Analysts surveyed by Bloomberg estimated an operating profit of 8.38 trillion won ($7.41 billion).

Sales of the giant South Korean electronics manufacturer in the first quarter were up by almost 15%, to 52 trillion won ($45.95 billion) from 45.27 trillion won ($41.77 billion) a year earlier.

Samsung’s mobile phone business was again the main profit generator: the devices with low profit margins contributed to the increase coming from the Galaxy series. The company launched on March 14 in New York its flagship Galaxy S4 with a larger screen and enhanced software functions, in an attempt to regain the first place in the sale of mobile phones in the U.S., where it was overtaken by Apple in the last three months of 2012.

“In addition to the Galaxy S3, mini models sold well in emerging markets, including China, Brazil and India. Samsung’s continued ascent in the smartphone industry seems to be unparalleled,” said Sei Cheol Lee, an analyst at Meritz Securities in Seoul.

Despite strong growth results, Samsung didn’t post any gains on the stock market. Shares of the company fell by 1% to 1,505,000 won on the Seoul stock exchange. This year the shares recorded a drop of 1.1% compared with a decline of 1.9% of the South Korean stock market index.

Samsung’s mobile division, which last year made 67% of total operating profit, might have generated in the first quarter of 2013 an operating profit of 6.25 trillion won ($5.52 billion), amid growing sales by 40%, according to a survey of five analysts compiled by Bloomberg.

On the flat-screen TV market, the company is a global leader with a market share of 27.7%, ahead of LG Electronics which has a 15% share, according to NPD DisplaySearch.

The quarterly profit of display division, which dominates the global market for displays with organic light emitting diodes (OLED), likely rose to 910 billion won ($800 million) from 230 billion won ($200 million) a year earlier, according to the Bloomberg survey. The OLED displays are used on Galaxy devices.

Galaxy device sales remained strong, says an analyst at NH Investment & Securities in Seoul. He estimates that shipments of smartphones in the first quarter amounted to 70 million units from 62 million in the previous quarter. Apple sold 47.8 million units in the fourth quarter of 2012, the company said in January.

Samsung plans to launch three new flagship devices in 2013, including Galaxy S4, a new version of Galaxy Notes and a device that uses the Tizen operating system developed by Intel.

For the second quarter, Samsung’s operating profit will likely exceed 10 trillion won ($8.84 billion), mainly due to sales of Galaxy S4, says an analyst at IBK Securities.

Sales of peak models including Galaxy S4 could total 37.8 million units in the second quarter, while the average selling price could increase by 17%, thereby bringing the operating profit of the mobile division to 7.9 trillion won ($6.98 billion), IBK Securities analyst said.

Also, according to the same analyst, the total smartphone shipments could rise to 82 million units in the second quarter from 68.5 million units in the first quarter.

Here is the table showing the average estimated operating profit for each of Samsung’s four main business lines. Estimates are in millions of dollars.