SEOUL, Oct. 13 (Korea Bizwire) – South Korean tech giant SamsungElectronics Co. said Friday that its third-quarter operating profit is expected to have nearly tripled on-year, apparently on the sound returns from its computer chip business.
Operating profit was estimated at 14.5 trillion won (US$12.8 billion), compared with 5.2 trillion won tallied a year earlier, the company said in a regulatory filing.
Sales also probably surged 29.65 percent to 62 trillion won in the July-September period from a year earlier.
The operating profit figure was slightly higher than the market’s consensus of 14.3 trillion won, a number compiled by Yonhap Infomax, the financial arm of Yonhap News Agency, based on 21 local brokerage houses.
Samsung did not announce the performance estimates of each business division, although the chip business is anticipated to have played a key role in the record-beating report. The company is set to release its final earnings report later this month.
The guidance report indicates the overall operating margin for the third quarter came to 23.4 percent, also setting a new record. Analysts said Samsung’s strong earnings are attributable to increased shipments of chips.
“The shipment of DRAM and NAND products increased 12 percent and 21 percent (in the July-September period) on-quarter, while the average sales price also advanced 6 percent and 2 percent, respectively,” said Kim Dong-won, an analyst at KB Securities Co., adding that the operating profit of the chip division is estimated at 9.9 trillion won.
KB Securities added the rising sales of the Galaxy S8 and Galaxy Note 8 smartphones will also improve the profitability of the mobile division, putting the sector’s operating profit estimate at a better-than-expected 3.3 trillion won.
Analysts said Samsung’s chip business may have posted an operating profit of 10 trillion won in the third quarter, along with sales of 20 trillion won, putting the operating margin at above 50 percent.
Samsung raked in 8.03 trillion won from the chip business in the April-June period in operating profit, along with 4.06 trillion won from the mobile arm.
As for the fourth quarter, Samsung Electronics is expected to continue its growth, backed especially by its highly competitive chip business.
“The release of new models, including the iPhone X by rival Apple Inc., could weigh down on the mobile business, but it will at the same time help Samsung’s parts business,” said Doh Hyun-woo, analyst at Mirae Asset Daewoo Securities Co. in a report.
Mirae Asset Daewoo Securities added the consumer electronics division will experience growth on the back of strong seasonal demand.
Yonhap Infomax data based on research from 21 securities firms showed Samsung is expected to post an operating profit of 16 trillion won in the fourth quarter, up 74 percent from a year earlier.
Shares of Samsung Electronics traded at 2,732,000 won as of 9:00 a.m., down 0.29 percent from the previous session. Samsung announced its earnings guidance before the market opened Friday.