Outlook for South Korea’s tech giant Samsung Electronics Co. brightened after it released far-better-than-expected earnings estimates in the first quarter despite a prolonged slump in the global economy and seasonal slowdown in IT and electronics businesses.

On Thursday, the company reported an operating profit of 6.6 trillion won ($5.7 billion) on a consolidated basis for the first quarter ended March, up 7.5 percent from the previous quarter and 10.4 percent higher from the same period a year ago. Until last month, the market expected the electronics behemoth to register a profit of no more than 5 trillion won.

Samsung Electronics shares fell 1.25 percent to end at 1,269,000 won in Seoul trading on Thursday despite its better-than-expected earnings guidance.

A weaker Korean currency and brisk sales of its latest flagship smartphone models fueled its growth for the first quarter. It sold over 10 million units of the Galaxy S7 series upon earlier-than-planned release in the quarter. IT and mobile business that drove the company, generating a profit of more than 4 trillion won until the second quarter of 2014, saw the figure nearly halved last year. In the first quarter, it is estimated to have raised over 3.8 trillion won, and it is the first time for operating income of the IM business to surface 3 trillion won since the second quarter of 2014.

The cheaper won also bolstered price competitiveness of its product ranging from consumer appliances to semiconductor. The U.S. dollar strengthened over 1,200 won throughout the first three months of the year. The company is estimated to have added millions of dollars thanks to a weaker won.

Despite a fall in average prices of memory chips, it kept up profit and edge in the field through a product mix of highly lucrative next-generation 3D NAND (non-volatile storage) flash and 10-nanometer-class dynamic random access memory (DRAM) chips.

Its U.S. DRAM rival Micron Technology Inc. in contrast reported a net loss of $48 million with sales plunging 30 percent on year to $2.9 billion in the first three months of 2016.

Sales for Samsung Electronics also remained lackluster. The guidance on sales for the first quarter reached 49 trillion won, down 8.1 percent from the previous quarter and up 4 percent on year. It fell short of market estimate of over 50 trillion won.

By sector, the market forecasts the company has raised 3.8 trillion won in operating profit from its IM business, 2.6 trillion won from its semiconductor division and 500 billion from the consumer electronics business. Market analysts, however, predict its display division would log an operating loss of 300 billion won amid a sharp drop in liquid crystal display (LCD) panel prices.

Detailed and final figures by division will be released later this month.

By Song Sung-hoon and Lee Gi-chang

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]