Samsung says first quarter profit plummets

Fri, 04/24/2009 - 8:10am
Kelly Olsen, AP Business Writer

SEOUL, South Korea (AP) – Samsung Electronics, the world's No. 1 maker of computer memory chips and flat-screen TVs, said net profit plummeted 72 percent in the first quarter as the global economic slump continued to suppress consumer demand.

Samsung earned 619.20 billion won ($463.5 million) in the three months ended March 31, it said Friday in a regulatory filing. The company earned net profit of 2.19 trillion won a year earlier.

Samsung Electronics Co., a major global brand, is also the world's leading manufacturer of liquid crystal displays. It is the world's second-largest manufacturer of mobile phones behind Finland's Nokia Corp.

Quarterly sales rose 8.5 percent to 18.57 trillion won from 17.11 trillion won a year earlier.

Samsung said weak demand for semiconductors, one of its mainstay products, extended into the first quarter.

The company manufactures DRAM, or dynamic random access memory, chips used mostly in personal computers, as well as NAND flash memory chips used in digital devices such as cameras and music players.

The result was still an improvement over the fourth quarter of last year, when Samsung posted its first-ever net loss for a three-month period as the global economic slump hit prices and demand.

Samsung said in a release that market conditions were improving, noting the "strong recovery from the fourth quarter" as semiconductor prices stabilized, profit margins for mobile phones increased and the company took steps to control marketing and other expenditures.

Still, officials were cautious of the outlook for the business in the coming months.

"The global economy is likely to continue to recover in the second quarter, but lingering uncertainty means it is difficult to predict a sharp improvement in demand or the business environment in the near term," Robert Yi, head of investor relations, said.

Samsung said that flat-panel TV sales remained weak, but the company outperformed competitors due to a strong performance in North America.

The company forecast a marginal increase in sales in the second quarter, "driven by seasonal demand and the introduction of digital broadcasting in the United States."

Shares in Samsung, which released results early in the trading session, fell 5.6 percent to close at 592,000 won.

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