Samsung Elec tips higher second-quarter profit on Galaxy S6 sales

By Se Young Lee

SEOUL (Reuters) - Samsung Electronics Co Ltd on Wednesday said it expects earnings to rise in the second quarter after posting its highest profit in three quarters in January-March, boosted by strong demand for its new Galaxy S6 flagship smartphones.

Samsung's renewed focus on design after a period of stagnation in its smartphone range appears to be paying dividends, with researcher Strategy Analytics saying the South Korean giant overtook Apple Inc as the world's top smartphone maker in the first quarter.

"Galaxy S6 sales have been going as well as expected, while demand for the Galaxy S6 edge have been better than anticipated," Samsung Vice President Park Jin-young said during a conference call.

The firm reported a January-March operating profit of 6 trillion won ($5.64 billion), in line with the 5.9 trillion won profit it had guided for earlier this month and the highest in three quarters.

Earnings for April-June should continue to rise, it said, with the two Galaxy S6 models - featuring new design flourishes like metal bodies - likely to break the company's sales record.

Samsung shares have slipped in recent weeks on concerns that the Galaxy S6 phones, on sale since April 10, may not sell as well as first hoped.

But executives on Wednesday sought to reassure investors that sales were healthy so far and that supply problems associated with the curved-screen S6 edge should be resolved in the current quarter.

"I don't see any devices within the current Android camp that could stand as an alternative to Samsung's high-end smartphones," Daewoo Securities analyst Jonathan Hwang said.

Samsung's mobile division's January-March operating profit improved to a three-quarter high of 2.74 trillion won.

But the chips business remained the top earner at 2.93 trillion won, thanks in part to surging orders from smartphone makers including Samsung itself. The company said it expected robust chip sales to continue in the April-June period.

Even so, few expect Samsung to return to the record profits of 2014 given intensifying competition in the global smartphone market. Apple topped Wall Street's profit forecasts on Monday as it sold more iPhones in China than the United States for the first time.

Samsung also warned that the typical industry pattern of a stronger second half may not be as pronounced this year due to risks like the weaker euro and emerging market currencies.

The median forecast from a Thomson Reuters I/B/E/S poll of 49 analysts tips Samsung's 2015 profit at 27.7 trillion won, up 10.8 percent from 25 trillion won in 2014.

($1 = 1,063.7700 won)

(Editing by Stephen Coates)