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Samsung profit exceeds forecast

Friday, 7 April 2017

SEOUL: Samsung Electronics Co. posted higher-than-projected profit on strong sales of memory chips and displays, showing that its core businesses remain stable even after losing its global lead in smartphones to Apple Inc.

Operating income rose 48% to 9.9 trillion won ($8.74 billion) in the 3 months ended March, the highest in almost 4 years, the Suwon, South Korea-based company said in preliminary results released Friday. Samsung’s latest flagship phone, the Galaxy S8, didn’t debut until after the end of the quarter and isn’t reflected in the figures.

Rising demand for memory chips and organic light-emitting diode screens helped to fuel a rise in sales to 50 trillion won in the quarter, compared with the 49.5 trillion won analysts expected. The results also underscore how the electronics conglomerate is recovering from last year’s Note 7 crisis, when some smartphones burst into flames and forced Samsung to pull it from shelves. That was followed by the arrest of de facto chief Jay Y. Lee in February in connection with an influence-peddling scandal.

Samsung’s shares have climbed 16% this year and are trading near record highs. Korea posted record exports for semiconductors and OLED displays in the first quarter, its trade ministry said last week, without naming the manufacturers. SK Hynix Inc. is Samsung’s main domestic rival for memory chips while LG also produces displays.

Samsung posted its best operating profit in the third quarter of 2013 when it earned 10.2 trillion won. The 48-year-old Lee has denied allegations from prosecutors that he bribed former president Park Geun-hye’s friend to secure government backing for a 2015 merger that helped him tighten his control over Samsung. He’s set to make his first court appearance on Friday.

The company is now counting on the S8 to repair its reputation after the Note 7 ordeal and deal with challenges from Apple and up-and-coming rivals such as Huawei Technologies Co. and Oppo. The new flagship phone, which features a bezel-less display and voice-enabled digital assistant, was unveiled last week and will ship later this month.

Samsung won’t provide net income or break out divisional performance until it releases final results later this month. “Despite unprecedented issues like the massive Note 7 recall and the investigation of Jay Y. Lee under detention, earnings continue to skyrocket,” Lee Seung-woo, head of research at IBK Securities Co., wrote in a report.

Source by: Internet

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