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(4th LD) Samsung posts surprise, record-high operating profit for Q2

All News 15:35 July 07, 2017

(ATTN: ADDS photo; UPDATES with closing share price in last para)
By Kang Yoon-seung

SEOUL, July 7 (Yonhap) -- South Korean tech giant Samsung Electronics Co. predicted Friday that its second-quarter operating profit shot up nearly 72 percent on-year to post a record-high quarterly level, apparently helped by the robust performance of its chip business.

The stronger-than-expected operating profit was estimated at 14 trillion won (US$12.1 billion), compared with 8.14 trillion won posted a year earlier, the company said in its regulatory filing.

It marks the highest quarterly operating profit ever posted by the world's leading memory chip and smartphone manufacturer. The previous record was set in the third quarter of 2013, when Samsung's operating profit hit 10.1 trillion won.

(4th LD) Samsung posts surprise, record-high operating profit for Q2 - 2

Samsung's second-quarter sales also set a new record by advancing 17.8 percent to an unprecedented 60 trillion won in the April-June period.

The expected result statement on operating profit exceeded the market's earlier expectation of 13.1 trillion won, compiled by Yonhap Infomax, the financial news arm of Yonhap News Agency, on 23 South Korean brokerage houses.

The operating profit for the second quarter can be translated into 152.1 billion won per day, indicating that Samsung made 6.3 billion won every hour.

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

Analysts said the record-high performance came on the back of the improved shipment and price of DRAM and NAND products.

Industry watchers said the chip business is expected to have posted an operating profit of 7 trillion won, beating the previous record of 6.3 trillion won posted in the first quarter of 2017.

The mobile business gathered ground on strong sales of the Galaxy S8 smartphones, which increased the average-sales-price of its handsets.

The IT and Mobile division is presumed to have posted an operating profit of mid-3 trillion won for the second quarter, up from 2.7 trillion won posted in the January-March period.

The combined global sales of the Galaxy S8 smartphones are estimated at 20 million units, industry sources said.

"Considering the Galaxy S8 was released at end-April, around a third of the second-quarter performance is attributable to the new device," a Samsung official said. "The situation will further improve if the full-fledged sales of the Galaxy S8, along with the Galaxy Note FE, begin in the third quarter."

Samsung on Friday kicked off official sales of its refurbished Galaxy Note 7, named the Galaxy Note Fan Edition (FE), whose production was suspended last year due to battery issues.

The rising demand for flexible OLED products and increased LCD panel prices also helped the South Korean tech giant enjoy strong earnings, they added.

Analysts said Samsung is expected to continue to post strong earnings this year.

"Samsung will continue to generate quarterly operating profit hovering above 13 trillion won over the second half," Kwon Seong-ryul, a researcher at Dongbu Securities Co. said in a report, predicting the growth will be attributable to server DRAM, as well as 3-D NAND products.

"Although the chip business is leading the overall performance, the display and smartphone sectors are also performing well," Kwon added.

As for the third quarter, Samsung is expected to post an operating profit of 13.9 trillion won, along with sales of 60.3 trillion won, according to the data compiled by Yonhap Infomax on 23 South Korean securities firms.

The anticipated launch of the Galaxy Note 8 phablet later this year also lends support to Samsung's rosy outlook, market watchers added.

The annual operating profit for 2017 is expected to reach 50 trillion won, also beating the previous record of 36.7 trillion won tallied for 2013.

Industry watchers, however, also expressed concern over Samsung's long-term strategy amid the absence of key figures from the company.

Samsung Electronics Vice Chairman Lee Jae-yong, the heir-apparent of the Samsung conglomerate, has been imprisoned since February amid his alleged connection to a political scandal, which led to the ouster of former President Park Geun-hye.

His father Lee Kun-hee also has shown no signs of recovery since being hospitalized in May 2014 after suffering a heart attack.

"The latest robust performance was made possible by group wide investment made in the past," a company official said, claiming the absence of the leaders may deal a harsh blow for its future strategies.

Shares of Samsung Electronics closed 0.42 percent lower at 2,393,000 won Friday. The second-quarter prediction was released before the main bourse opened.

(4th LD) Samsung posts surprise, record-high operating profit for Q2 - 1


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