Samsung Electronics Co expects profits to soar 72 percent in the second quarter to a record high as it moves on from a recall debacle thanks to rising memory chip prices and increased demand for smartphones, the company said yesterday.
The South Korean tech giant estimated its operating profit for the April to June period at 14 trillion won (US$12.1 billion), up from 8.14 trillion won a year earlier.
That would reportedly make it more profitable in the period than US behemoth Apple Inc, where consensus analyst forecasts point to a profit of US$10.6 billion.
“Samsung is believed to have topped the list of global IT companies, surpassing Intel and Apple, in terms of operating profits for the first time in history,” KB Investment and Securities Co analyst Kim Dong-won said.
It would also be Samsung Electronics’ highest-ever quarterly operating profit, surpassing the 10.1 trillion won of the third quarter of 2013.
Samsung has benefitted from increased shipments and strong prices for DRAM and NAND semiconductor chips, as it put behind it last year’s Galaxy Note 7 recall fiasco. It appears not to have been distracted by the corruption trial of its detained vice chairman Lee Jae-yong.
Brisk sales of its new flagship Galaxy S8 smartphones, rising demand for flexible OLED products,as well as soaring LCD panel prices also drove its earnings, analysts said.
Samsung withholds sector-by-sector business performance until it releases its final earnings report later this month.
However, “all the three sectors — semiconductor business, display and smartphone business — are all believed to have performed well,” HMC Investment Securities Co analyst Greg Roh said. “This is a better-than-expected performance,” he added.
The earnings forecast surpassed a market consensus of around 13.2 trillion won compiled by FnGuide, a financial information service provider.
Sales for the April to June period are expected to surge 17.8 percent year-on-year to 60 trillion won.
Analysts expected the firm to continue to post strong earnings this year.
Kwon Seong-ryul, a researcher at Dongbu Securities Co, projects annual operating profits of 50 trillion won for this year, up 70 percent from last year.
“The chip business is leading the overall performance, the display and smartphone sectors are also performing well,” Kwon said in a report.
However, Samsung shares yesterday closed 0.42 percent lower in Seoul on profit-taking led by foreign investors.
The world’s top maker of smartphones and memory chips said this week that it is to invest 20.4 trillion won by 2021 to expand and upgrade its chip plants in the South Korean cities of Pyeongtaek and Hwaseong.
The company also plans to expand its NAND chip plant in the Chinese city of Xian to meet booming demand for the chips used in high-end storage products.
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