Samsung Electronics today reported financial results for the first quarter ended March 31, 2020. Total revenue was KRW 55.33 trillion, a decrease of 7.6% from the previous quarter mainly due to weak seasonality for the Company’s display business and Consumer Electronics Division and partially due to effects of COVID-19. From a year earlier, revenue rose 5.6% due to increasing demand for server and mobile components.

Operating profit was lower by KRW 0.7 trillion quarter-on-quarter to KRW 6.45 trillion, affected by the same factors that weighed on revenue with a corresponding decrease in operating margin, even though memory earnings were higher. Compared with a year earlier, operating profit increased by KRW 0.2 trillion with an improved product mix in the mobile business and additional diversification of the Company’s customer base in mobile OLED.

In the quarter, foreign exchange movements had little impact on the overall operating profit as the positive effects from a stronger U.S. dollar and euro against the won – felt mainly in the component business – were offset by weakness in currencies in major emerging markets.

Earnings from the Memory Business improved as demand was solid mainly from servers and PCs, while demand from mobile remained steady. Profits from the logic chip business rose as supply of mobile components increased to major customers and the foundry business saw a profit decline due to lower demand for high-performance computing (HPC) from China.

In the Display Panel Business, mobile displays posted a decline in earnings amid weak seasonality and lower sales in China due to COVID-19 related shutdowns, while losses narrowed in the large panel business.

The Mobile Communications Business saw profits increase from the previous quarter and from a year earlier despite weakening sales toward the end of the first quarter. The profit improvement was a result of an improved product mix with the launch of flagship Galaxy S20 devices and efficient management of marketing expenses.

The Consumer Electronics Division posted lower earnings as weaker seasonality and impact from COVID-19 affected quarterly results. Compared to the previous year, profits from the TV business declined amid pricing pressure from intensifying competition, while home appliances saw an improvement on the back of strong sales of new premium products.

Looking ahead to the second quarter, the Company expects the memory business to remain solid, but overall earnings are likely to decline from the previous quarter because COVID-19 will significantly impact demand for several of its core products.

For the component business, memory demand is expected to remain robust for servers and PCs as more people work from home, but it is possible the mobile market may soften. Earnings from OLED screens are likely to be weaker due to a stagnant smartphone market.

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. To address this, the Company will leverage its global production flexibility and supply networks as well as strengthening its online sales capabilities.

In the second half, uncertainties driven by COVID-19 will persist as the duration and impact of the pandemic remain unknown. The Company plans to focus on optimizing resource allocation in the short term, while continuing to strengthen its technology leadership and develop innovative set products.

For the Memory Business, the Company plans to address market changes through flexible investments and product mix adjustments. For OLED, it will actively meet demand for new product releases and expand presence in new application areas such as foldable displays.

The Mobile Communications Business aims to strengthen its product lineup by introducing new premium models and expanding offerings of 5G models for the mass market. The Networks Business will focus on developing technologies and enhancing global competitiveness to reinforce the 5G business.

For the Consumer Electronics Division, under the risk of current economic uncertainties, the Company will closely monitor the market situation and will continue to focus on minimizing negative impacts by investing in efficient marketing and promotions tailored to each region and by optimizing its logistics.

In the first quarter, Samsung Electronics’ capital expenditure totaled KRW 7.3 trillion, including KRW 6.0 trillion spent on semiconductors and KRW 0.8 trillion on displays.