SEOUL, Jul. 27 (Korea Bizwire) — Samsung Electronics Co. on Thursday said its second-quarter net profit advanced 89 percent on-year to set a new record, apparently helped by strong returns from its chip business amid an industrywide boom.
Net profit came to 11 trillion won (US$9.8 billion), rising sharply from 5.8 trillion won posted a year earlier, the company said through a regulatory filing.
Operating profit came to 14.1 trillion won in the April-June period, up 72.7 percent from 8.14 trillion won posted last year. The figure met the estimate of 14 trillion won announced by Samsung through a guidance report earlier this month.
Sales also advanced 19.76 percent to reach 61 trillion won over the cited period, the world’s largest memory chip and smartphone manufacturer added.
The net income is higher than the estimate of 10.1 trillion won compiled by Yonhap Infomax, the financial arm of Yonhap News Agency, on 22 South Korean brokerage houses.
The second-quarter sales, operating profit and net income all represent record-breaking quarterly numbers for the tech giant.
The operating profit translates into Samsung earning 152.9 billion won every day over the April-June period, or 6.3 billion won per hour.
Samsung Electronics said the robust performance is attributable to the boom in the chip and memory industries, coupled with a rise in demand for high-end products.
The company’s chip business posted an operating profit of 8.03 trillion won, soaring from 2.64 trillion won posted a year earlier, on the back of the rising demand for server DRAMs and SSD products. The figures come despite the falling seasonal demand for memory chips.
It marked the first time for the chip business to post an operating profit above the 8 trillion-won mark.
Industry watchers said Samsung will continue to solidify its dominance over the second half on the rosy outlook over prices of DRAM and NAND products.
Samsung said the chip business is anticipated to maintain robust earnings down the road on rising demand from server and mobile products.
The display panel business posted an operating profit of 1.71 trillion won, rising sharply from 140 billion won tallied a year earlier.
The mobile business, in addition, posted an operating profit of 4.06 trillion won, falling slightly from last year’s 4.32 trillion won, with the sales of the company’s latest Galaxy S8 and S8 Plus flagship phones hovering above numbers for the Galaxy S7 series units in 2016, Samsung said.
The mobile arm’s performance marks sharp growth from 2.7 trillion won in profits posted in the previous quarter in the wake of the suspension and recall of its Galaxy Note 7 phablet last year on safety issues.
Samsung is estimated to have sold 20 million units of the Galaxy S8 series around the globe so far.
“While (the Galaxy S8 smartphones) were released a month later than the Galaxy S7, which was launched in March 2016, the sales of the Galaxy S8 smartphones outpaced the Galaxy S7 in most of the regions when calculated over the same period,” the company said.
Samsung said in some regions, the sales of the Galaxy S8 series doubled compared with numbers posted by the Galaxy S7 series.
The company added the shipment of the 6.2-inch Galaxy S8 Plus hovered above the 5.8-inch Galaxy S8.
Industry watchers said the Galaxy Note 8, slated to be showcased at end-August, will lend further support to Samsung’s smartphone sales for the remainder of 2017.
The company said it also plans to diversify its budget smartphones over the second half to maintain the arm’s profitability.
For the July-September period, however, Samsung said the mobile division’s operating profit may decline on-quarter due to the expanded marketing expenditures on the new phablet.
To maintain growth, Samsung said it plans to beef up connections among its devices, while opening its payment, cloud and voice-recognition platforms with products of other companies to expand its ecosystem.
Over the second quarter, Samsung said it sold 93 million units of handsets, along with 6 million units of tablet PCs. Of the handsets sold, smartphones accounted for 80 percent, with the average sales price estimated at around $230.
The consumer electronics business posted an operating profit of 320 billion won, down from 1 trillion won posted a year earlier, with the company maintaining its lead in the premium TV sector. Price changes in panels, however, led to a weakened profitability.
Samsung said it rolled out facility investment worth 12.7 trillion won in the second quarter, with 7.5 trillion won and 4.5 trillion won being allocated to the chips and display sectors, respectively.
The first-half facility investment is estimated at 22.5 trillion won, the company added.
While Samsung said it has not yet finalized the investment plan for all of 2017, the company hinted the amount will rise sharply on-year on the back of expanded expenditures on chips and displays.
The company said it will focus efforts on expanding production of V-NAND products to meet the rising global demand, as well as tap deeper into the flexible OLED panel productions.
The tech giant said it will also roll out a cash dividend worth 7,000 won per share. The combined amount is estimated at 965 billion won.
Samsung added it expects challenges for the remainder of 2017 due to uncertainties at home and abroad.
Industry watchers, meanwhile, have 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 company, has been imprisoned since February and is standing trial for his alleged connection to a political scandal, which led to the ouster of former President Park Geun-hye.
Shares of Samsung Electronics closed 0.08 percent lower at 2,490,000 won on the main bourse Thursday. The second-quarter report was announced before the market opened.