(3rd LD) Samsung Electronics' Q1 operating profit estimated at 9.9 tln won

All News 09:50 April 07, 2017

(ATTN: ADDS details throughout, photo)
By Kang Yoon-seung

SEOUL, April 7 (Yonhap) -- Samsung Electronics Co. predicted Friday that its first-quarter operating profit for this year advanced 48.2 percent on-year, apparently helped by the robust performance of its chip business.

Operating profit is estimated at 9.9 trillion won (US$8.76 billion) in the January-March period, compared with 6.68 trillion won posted a year earlier, the South Korean tech giant said in its regulatory filing.

It marks the second-highest quarterly operating profit ever posted by Samsung Electronics. The current record was set in the third quarter of 2013, when Samsung's operating profit hit 10.1 trillion won.

Samsung's sales over the cited period edged up 0.44 percent to 50 trillion won, the data also showed.

Samsung did not announce the performance of each business division. The company is set to release the finalized earnings report later this month.

The first-quarter operating profit was above the market's earlier estimate of 9.43 trillion won, compiled by Yonhap Infomax, the financial news arm of Yonhap News Agency, on 22 South Korean brokerage houses.

Samsung has been facing various challenges since last year, including the suspended production of the Galaxy Note 7 phablet and the arrest of the firm's de facto head Lee Jae-young in line with the corruption scandal that led to the ouster of South Korea's president.

Industry watchers, however, said Samsung's strong performance in chip sales is forecast to have helped improve its bottom line.

Local brokerages said the global chip industry has been enjoying a boom since the second half of 2016. Samsung is expected to have posted a sound operating profit from its chipmaking business, which may have reached a whopping 6 trillion won.

The South Korean tech giant posted an all-time high operating profit of 4.9 trillion won in the chip segment in the October-December period of 2016.

Although its IT and mobile business is presumed to have posted lackluster earnings on the suspension of the ill-fated Galaxy Note 7, industry watchers said the Galaxy S8 and the Galaxy S8 Plus, which will hit shelves this month, will help the company recoup earnings down the road.

Industry watchers estimate Samsung to have posted an operating profit around 2.5 trillion won in its IT and mobile segment. While the figure hovers far below 3.8 trillion won posted a year earlier, the estimate can be considered reasonable considering the suspended production and recall of the phablet.

The South Korean company is estimated to have sold 9 million units of the Galaxy S7 smartphones in the January-March period. The company had solid sales of its budget model mobile phones, such as the Galaxy J series.

The second-quarter operating profit is expected to reach 12 trillion won, industry watchers said. If the global chip business continues to post robust performances, Samsung's annual operating profit may hover far above 40 trillion won this year coupled with smartphone sales, they added.

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

Shares of Samsung Electronics traded at 2,079,000 won on the main bourse as of 9:26 a.m., down 0.62 percent from the previous trading session.