Galaxy smartphones sales boost Samsung Electronics profits

Samsung Electronics has announced its profits surged 76% in the last quarter of 2012, helped by sales of its Galaxy smartphones.

Net income rose to a record 7.04 trillion won ($6.6 billion), up from 4.01 trillion won in the same period a year earlier, beating analysts’ expectations.

The Korean firm said its mobile profits more than doubled over the same period.

Last year, Samsung became the world’s biggest smartphone maker, overtaking Apple, its main rival in the sector.

“Overall its earnings momentum remains intact,” said Lee Se-chul, from Meritz Securities in Seoul.

“Smartphone shipments will continue to grow, even in the traditionally weak first quarter, as Samsung’s got a broader product line-up and Apple appears to be struggling in pushing iPhone volumes aggressively.”

Samsung did not provide data on the number of smartphones it had shipped, but analysts estimate it sold 63 million smartphones in the quarter.

The strong sales numbers come after Apple shares tumbled 12% in the US on Thursday, over fears the company was losing its edge in key smartphone markets.

Apple had reported record quarterly revenues of $55 billion, but there was disappointment over sales of the company’s new iPhone 5.

Samsung said its Galaxy line of smartphones and tablets has been its top seller, driving profits.

The handsets division, which sells about a quarter of all mobile phones in the world according to analysts, saw an operating profit of 5.44tn won, up from 2.56tn won a year earlier.

Earnings were also helped by Samsung’s displays unit, which made a profit, after losses a year earlier.

The unit enjoyed a sales boost from its organic light-emitting diodes (OLED) screen, used in the Galaxy smartphones.

The firm said its capital spending this year will be similar to 2012 levels, despite analyst expectations that it would be cut.

However, it did caution that increased competition in the smartphone sector could lead to a softening of demand in some regions.

“The furious growth spurt seen in the global smartphone market last year is expected to be pacified by intensifying price competition, compounded by a slew of new products,” the company said in its earnings statement.

“In the first quarter, demand for smartphones in developed countries is expected to decelerate, while their emerging counterparts will see their markets escalate with the introduction of more affordable smartphones and a bigger appetite for tablet PCs throughout the year.”

Both Apple and Samsung are facing tough competition in markets such as China from smartphone-makers with more competitive prices.