Samsung registers record profits in Q1 2017 despite decreased flagship mobile sales

South Korean tech giant Samsung Electronics posted its biggest quarterly net profit for more than three years Thursday after shrugging off the debacle over exploding Galaxy Note 7 batteries. The operating margin that measures the income against sales rose 6.2 percentage points on year to 19.6 percent in the first quarter.

Kim Dong-won, an analyst at KB Securities, said, "Samsung's operating profit in the second quarter is expected to be around 12.5 trillion won, a 54 percent rise year-on-year".

Profit breakdown showed the firm's semiconductor business made its largest-ever operating profit of 6.3 trillion won.

Five of its top executives, including Lee Jae-yong, the de-facto leader and the only son of its chairman, were indicted on corruption charges in a political scandal that brought on months of public protests and resulted in the ouster of the South Korean president.

Even though the first quarter is typically a slow season for chipmakers, tight global supplies and strong demand for microchips for computers, data servers and mobile devices led to a record-high profit. It is the second largest-ever quarterly earnings after the historic high of 10.2 trillion won in the third quarter of 2013.

Samsung said its facility investment came to 9.8 trillion won in the January-March period, with the chip and display businesses accounting for 5 trillion won and 4.2 trillion won, respectively. Almost two-thirds of Samsung's operating income during the first quarter was generated by its semiconductor business. Samsung said it was not a product quality issue and it will release a software update to allow subtle adjustments of screen colors.

Shares of Samsung Electronics traded at 2,115,000 won as of 9:09 a.m. on the main bourse, down 1.17 percent from the the previous trading session.

The firm has also come under growing pressure from investors to overhaul its byzantine ownership structure, which enables the founding Lee family to control the vast Samsung empire with complex web of cross-holdings across dozens of group units.

"Samsung concluded the risks and the challenging environment surrounding a change in the corporate structure would not be beneficial for enhancing shareholder value and sustaining long-term business growth", it said in a statement. People use their smartphones near an advertisements of the Samsung Electronics Galaxy S8 smartphone at its shop in Seoul, South Korea, Thursday, April 27, 2017.

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