SEOUL: Samsung Electronics reported its net profit had risen 5.9 percent year-on-year in the first quarter with a decent showing by its chips division offsetting sliding smartphone revenue.

The South Korean giant logged 7.57 trillion won ($7.3 billion) of net profit in the first three months of the year, but saw operating profit slip 3.3 percent on-year to 8.49 trillion won, following a 6.0 percent decline in the fourth quarter.

Alarm bells have been sounding for a while over Samsung’s reliance on smartphone sales in mature markets such as Europe and the US, and increasingly competitive emerging markets such as China.

The world’s largest smartphone maker has a diverse product line ranging from memory chips to home appliances, but more than half of its profits are generated by mobile devices.

This month saw the global roll-out of the latest version of its flagship Galaxy series smartphone, the S5, whose performance will be closely watched over the coming months.

While reviews have rated the S5 a top-class product, they note that it offers little in the way of real innovation that would set it apart from previous versions and models offered by competitors such as Apple.

Samsung made margin concessions with the S5, launching it at a slightly lower price than its predecessor the S4 and throwing in a premium software bundle estimated at more than $500.

The strategy appeared to have met with some success, as the net profit figure released on Tuesday beat most analyst estimates.

Overall sales in the first three months of the year inched up 1.53 percent to 53.7 trillion won, but were down 2.5 percent for the mobile business unit.

The share price took a hit, falling 2.02 percent on Tuesday to close at 1.36 million won ($1,318) in a broader market that was down 0.23 percent.

Samsung acknowledged it was faced with a tough road ahead as demand would remain sluggish in the second quarter.

Kim Hyun-Joon, senior vice president for the mobile business, said the market for smartphones and tablet computers would “grow slightly” in the second quarter. “But we will try to continue solid earnings growth by expanding sales of Galaxy S5,” Kim said.

The company was expecting sales of Galaxy S5 to beat its predecessor S4, he said, despite some skepticism from observers.

Samsung rarely discloses sales figures for its smartphones but J.K Shin — the head of the firm’s mobile unit — said in October that S4 sales had reached 40 million globally since its release in April 2013.