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Smartphone sales drive Samsung to $6.4b record profit

Samsung Electronics posted record earnings as sales of its smartphones surged, widening the company’s global lead as its latest Galaxy handset hits stores to take on Apple in the US.

Net income rose 42 per cent from a year earlier to 7.15 trillion won ($6.4 billion) in the three months ended March, Samsung said in a statement on Friday. Sales of its smartphones jumped 56 per cent to 69.4 million units, almost double the number of iPhones sold by Apple, Strategy Analytics said.

Demand for Samsung’s devices, including the flagship Galaxy S4 that went on sale on Friday and cheaper phones targeting emerging markets, are stoking sales in the $358 billion handset market and driving most of the Suwon, South Korea-based company’s profits. Samsung said competition in the market, which is already slowing Apple’s growth, may intensify this year.

Samsung, the world’s biggest maker of mobile phones, fell 0.5 per cent to close at 1,486,000 won in Seoul trading, trimming the shares’ gain in the past year to 11 per cent. Investors may not buy on today’s news as the company already reported preliminary operating profit April 5, Heo said.

Samsung’s net income exceeded the 6.73 trillion-won average of 36 analyst estimates compiled by Bloomberg. Sales rose to 52.9 trillion won from 45.3 trillion won, and operating income, or sales minus the cost of goods sold and administrative expenses, increased to 8.78 trillion won from 5.69 trillion won a year earlier, Samsung said on Friday.

The company partly booked a damages payment to Apple in the quarter related to their patent dispute in the US.

Samsung’s capital spending in 2013 may be similar to last year’s 22.8 trillion won, the company said. That’s greater than the market capitalisation of competitors Sony, Panasonic or LG Electronics.

Operating profit at Samsung’s mobile unit was 6.51 trillion won. Profit at the consumer electronics unit, which oversees the TV and home-appliance businesses, fell to 230 billion won from 500 billion won a year earlier. Samsung is also the world’s largest maker of TVs.

“We may experience stiffer competition in the mobile business due to expansion of the mid- to low-end smartphone market,” Samsung’s Senior Vice President Robert Yi said in a statement today. “TV growth will continue to wane in developed markets.”