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(3rd LD) Samsung Electronics reports 50 pct jump in Q4 operating profit

All News 10:58 January 24, 2017

(ATTN: ADDS conference call, analyst's comments in paras 15-19, latest share price in last para)

SEOUL, Jan. 24 (Yonhap) -- Samsung Electronics Co. said Tuesday its operating profit for the fourth quarter of 2016 jumped 50.11 percent on year, thanks to rising prices of semiconductors and display panels.

Operating profit, which excludes income from subsidiaries, stood at 9.2 trillion won (US$7.89 billion) for the October-December period last year, compared with 6.14 trillion won for the same quarter in 2015, Samsung said in a regulatory filing.

Compared with a quarter earlier, fourth-quarter operating profit surged 77.34 percent.

(3rd LD) Samsung Electronics reports 50 pct jump in Q4 operating profit - 1

Fourth-quarter sales gained 0.03 percent on year to 53.3 trillion won, Samsung said.

The handsome earnings came even as Samsung is struggling to limit the damage done by the global recall of the Galaxy Note 7 smartphones over safety concerns that cost about $5.3 billion during the fourth quarter last year.

The result beat analysts' expectations. A survey of 17 brokerages by Yonhap Infomax, the financial news arm of Yonhap News Agency, had expected that Samsung would report a fourth-quarter operating profit of 8.4 trillion won.

It was the first time since the third quarter of 2013 that Samsung's quarterly operating profit surpassed 9 trillion won.

"Fourth quarter earnings were driven by the components businesses, mainly the memory business and the display panel segment," Samsung said in a statement.

"The stronger U.S. dollar against the Korean won also had a positive impact on operating profits," it said.

Samsung's semiconductor business posted an operating profit of 4.95 trillion won for the fourth quarter on sales of 14.86 trillion won.

"The memory division achieved strong earnings growth in the fourth quarter by focusing on high profitability and a differentiated product mix," Samsung said.

(3rd LD) Samsung Electronics reports 50 pct jump in Q4 operating profit - 2

For all of last year, Samsung posted an operating profit of 29.2 trillion won, up 10.7 percent from 2015.

Full-year sales stood at 201.87 trillion won for last year, compared with 200.65 trillion won in 2015.

Samsung said it will buy back 9.3 trillion won worth of its shares this year and pay a 2016 dividend of 27,500 won per share.

Kim Kyung-min, an analyst at Daishin Securities, said the planned dividend payment, totaling about 3.8 trillion won, beat market expectations.

"The size of the stock buyback plan is also bigger than market expectations," Kim said, adding that it would have a positive impact on the stock price of Samsung Electronics.

During a conference call with investors, Lee Myung-jin, head of Samsung's investor relations team, said the company sold 90 million mobile phones and 16 million TVs in the fourth quarter of last year.

Smartphones accounted for about 80 percent of Samsung's sales of mobile phones, Lee said.

Lee expected Samsung's sales of smartphones to rise during the first quarter of this year, while those of tablet computers are likely to fall.

Samsung's total capital expenditures for last year stood at 25.5 trillion won, lower than a previous guideline of 27 trillion won, the company said.

Capital spending for semiconductor businesses was 13.2 trillion won, while investment in the display panel sector reached 9.8 trillion won.

Samsung said it has not finalized a plan for capital spending for this year.

For the first quarter of this year, Samsung expected earnings to fall on a quarterly basis "as earnings in the set businesses are projected to decrease, resulting from increased marketing expenses in the mobile business and a sales decrease of TVs due to weak seasonal demand."

Shares of Samsung Electronics rose 0.21 percent to 1,907,000 won at one point in morning trading.
(END)

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