FILE PHOTO: People wears masks in front a Samsung Store at a main shopping area as the country is hit by an outbreak of the new coronavirus in downtown Shanghai, China February 21, 2020. REUTERS/Aly Song
SEOUL (Reuters) – Samsung Electronics Co Ltd said on Wednesday it expected its profit to decline in the current quarter, as strength in the chip business would be offset by a sales slump in smartphones and TVs.
Samsung said its first-quarter operating profit rose 3% in the January-March period, in line with an earlier estimate, as the stay-at-home trend due to the COVID-19 pandemic cushioned the virus blow.
The South Korean tech conglomerate’s chip business is benefiting from demand for servers and computers as stay-at-home orders force millions of people around the world to convert their homes into offices.
But sales of TVs and smartphones have slowed as recession-wary consumers postpone purchases of non-essential consumer electronics, a trend seen across the global tech industry.
“Sales and profits of set products business, including smartphones and TVs, are expected to decline significantly as COVID-19 affects demand and leads to store and plant closures globally,” Samsung said in a statement.
The world’s top maker of memory chips and smartphones reported an operating profit of 6.4 trillion Korean won ($5.2 billion), compared with 6.2 trillion won a year ago and its earlier estimate of 6.4 trillion won.
It said net profit fell 3% to 4.9 trillion won, while revenue climbed 5.6% to 55.3 trillion won.
Samsung Electronics shares fell 0.8% in a flat wider market in morning trade on Wednesday. The shares are down 10% so far this year, in line with the wider market.
Reporting by Hyunjoo Jin and Heekyong Yang; Editing by Stephen Coates and Muralikumar Anantharaman