Samsung Electronics sees Q3 profit boost
Seoul, October 7
Samsung Electronics Co Ltd today said it would post its first quarterly profit gain in two years, beating expectations as strong sales of chips and displays probably offset weakness in its smartphone division.
The South Korean tech giant estimated its July-September operating profit would leap 79.8 per cent from a year earlier to 7.3 trillion won ($6.29 billion), compared with a 6.7 trillion won profit tipped by a Thomson Reuters SmartEstimate poll of 30 analysts.
While analysts attributed much of the earnings surprise to the weaker won, Samsung’s shares were on track for their biggest daily percentage gain in nearly four years in midday trade as investors saw an end to successive quarters of declining earnings.
“There were worries that overall earnings will continue falling as mobile profits declined, but now the numbers make the case that Samsung has the capacity to withstand weakness from the mobile business,” IBK Securities Analyst Lee Seung-woo said.
Weaker won added about 300 billion won to operating profit, while cost-cutting and improved smartphone inventory management also probably helped, Dongbu Securities Analyst Yoo Eui-hyung said.
The world’s number one maker of smartphones and memory chips guided for a 7.5 per cent revenue increase for the third quarter, in line with expectations. It gave no further details about its performance, and will disclose full results in late October.
Samsung shares were up 6.3 per cent as of 0239 GMT, outperforming a 0.5 per cent gain for the broader market.
Its semiconductor division is expected to have remained the top earner for the fifth straight quarter, analysts said. Display earnings meanwhile are believed to have been boosted by rising sales to external clients such as Huawei Technologies Co Ltd, they added.
The won’s depreciation helped as well, with the average exchange rate against the dollar falling 12 per cent in the third quarter from a year earlier, as per Bank of Korea data.