Samsung Electronics said it looked forward to further improvements in earnings in the current quarter.
Chips, Phones Drive Best Earnings In Three Years For Samsung
Technology giant Samsung Electronics reported its best quarterly earnings since 2013, a gain that can be attribute to its memory chip business.
The South Korean based firm added that it would not become a holding as was demanded by Elliot Management, a US activist hedge fund.
Samsung also announced a $2.03 billion share buyback.
Results of the first quarter are in line with forecasts that the company, the leading manufacturer of memory chips, smartphones and televisions will record high profits for 2017.
Its Galaxy S8 smartphone, which was unveiled in April saw better than expected preorders, rising hopes that the company would compensate for the costly failure last year of the fire prone Note 7.
However, unreliable Wi-Fi connection and screens with a red tint have however dented the initial enthusiasm around the S8 forcing the tech giant to make software fixes.
In a statement, Samsung said, “As we look ahead to the second quarter, the company is looking to achieve growth based on the sustained performance of the memory business and together with better earnings from the mobile business as the Galaxy S8 and S8+ are rolled out globally."
Samsung, which is Asia’s most valuable company by market share capitalization, recorded an operating profit of $8.75 billion in the period between January and March, the highest since the third quarter of 2013.
Revenue made a 2 percent climb to50.5 trillion won. The company’s chip business brought in the largest chunk of revenue at 6.3 trillion won operating profit, which can be attributed to the prices of NAND and DRAM memory chips. Demand for more firepower on smartphones coupled with supply growth constraints has buoyed margins.
Apple’s closest competitor in the smartphone market reported an operating profit of 2.07 trillion won down from 3.89 trillion won last year.
Last year, Samsung unveiled its Galaxy 7 but the company did not have any premium products to generate significant sales in the period between January and March his year.
The impressive earnings came after Jay Y. Lee, Samsung’s chief was arrested in February following allegations that he was involved in a corruption scandal that saw President Guen hye get ousted from power. He is in trial but denies the charges against him.
The ongoing scandal has significantly distracted Samsung management, which is currently under pressure from Elliot Management calling for the company to split itself into two to form a holding company structure and to pay out 30 trillion won ($26.75 billion) in special dividend.
However, Samsung said on Thursday that it would not adopt the idea.
In a statement, the company said, “Samsung has decided that the risks and challenging environment around changing the company’s structure would not be beneficial for improving shareholder value and supporting long term business growth.”