Samsung expects profit to drop in Q2 as Covid-19 hits phone, TV sales

The South Korean conglomerate joins other tech giants in warning of uncertainty over how long the coronavirus will continue to hurt the industry.

Samsung Electronics on Wednesday said it expected its profit to decline in the current quarter due to a coronavirus-related slump in sales of smartphones and TVs, even as its chip business would remain solid.

The company said its operating profit rose 3 per cent in the January-March period, in line with an earlier estimate, as work-from-home orders boosted demand for server and computer chips.

The South Korean conglomerate joined other tech giants in warning of uncertainty over how long the coronavirus would continue to hurt the industry. "In the second half, uncertainties driven by Covid-19 will persist as the duration and impact of the pandemic remain unknown," Samsung said in a statement.

Other chipmakers SK Hynix and Intel last week posted forecast-beating first-quarter earnings, but did not provide full-year forecasts. Samsung Electronics reported an operating profit of 6.4 trillion won ($5.2 billion), compared with 6.2 trillion won a year ago. The world's top maker of memory chips and smartphones said its net profit fell 3 per cent to 4.9 trillion won, while revenue climbed 5.6 per cent to 55.3 trillion won.

Samsung'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 company's shares fell 0.8 per cent in a flat wider market in morning trade on Wednesday.