Finance

Don’t start celebrating Samsung’s bumper earnings just yet

children party kids hats crowns celebrating happyRafael Marques/Flickr (CC)

Samsung has announced some promising quarterly earnings — but it’s not out of the woods just yet.

The South Korean electronics giant has posted a year-on-year 12% jump in profits for the first quarter, and a 6% surge in revenues.

Its smartphone business is a strong driver of this: The division is once again its biggest driver of earnings, and enjoyed a 42% boost in operating profit for the quarter.

Here are the key numbers: In Q1 2016, Samsung had 6.68 trillion won ($5.6 billion) in operating profit, up from 2.95 trillion won ($2.6 billion) in Q1 2015; and 49.78 trillion won ($43.8 billion) in sales, up from 47.12 trillion won ($41.4 billion) a year ago.

On the face of it, it sounds great. Samsung’s smartphone division has struggled in recent years, pincered by Apple’s iPhone at the high-end and a growing crop of ultra-cheap smartphone manufacturers operating on razor-thin margins at the low-end.

But Q1 2015 to Q1 2016 isn’t really an apples-to-apples comparison. This year, Samsung brought forward the launch of its flagship smartphone, the Galaxy S7, by a month — to March 11. Back in 2015, the Galaxy S6 didn’t go on sale until April 10 — in Q2.

Of course Samsung’s profits are going to surge on the back of a major launch in the quarter compared to a previous year that didn’t.

Still, the company is optimistic. It’s predicting continued profit growth in Q2 “led by steady earnings in the mobile and semiconductor business,” The Financial Times reports. Samsung now needs to prove it can maintain this momentum.

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