Samsung Electronics Co flagged a nearly 80 percent jump in quarterly profit yesterday, as sales of chips and displays offset stiff competition in smartphones from Apple Inc and cheaper Chinese rivals, including Xiaomi Corp (小米).
The stellar earnings forecast sent shares soaring 8.7 percent by the closing bell. Samsung predicted operating profit of about 7.3 trillion won (US$6.6 billion) for July to last month, up from 4.1 trillion won a year earlier and 6.9 trillion won the previous quarter.
In addition to providing the chips for its own handsets, Samsung’s semiconductor unit also makes the processors for a number of other companies, including Apple.
The firm’s television business — the world’s largest — also helped shore up the balance sheet in the third quarter, Lee Seung-woo said, IBK Securities analyst.
A recent weakening of the won — down 12 percent year-on-year against the dollar by the end of the third quarter — helped boost profits since most sales of semiconductors and display panels to emerging markets are settled in dollars, he added.
“With sluggish sales of Galaxy S6 ... the [semiconductor and television] businesses were a major factor behind the surprise earnings,” Lee said.
Samsung did not provide breakdowns for each division, but Meritz Securities estimated the IT and mobile sector, including smartphone businesses, reaped a 2.1 trillion won operating profit in the third quarter, down from the previous quarter’s 2.7 trillion won.
The third-quarter operating profit prediction beat the estimate of 6.7 trillion won given by analysts surveyed by Bloomberg. Sales for the third quarter are expected to reach 51 trillion won, up 7.5 percent from a year earlier, the company said in a statement.
Yesterday’s estimate, which comes ahead of audited results later this month, did not give a net income figure or a breakdown of divisional earnings.
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