Samsung puts Q2 operating profit at record 6.7 tln won

South Korean tech giant Samsung Electronics Co. said Friday that it had probably posted a record operating profit in the second quarter on strong sales of its flagship Galaxy series smartphones.

Samsung, the world's largest maker of memory chips and smartphones, estimated its operating profit at 6.7 trillion won

($5.9 billion) for the April-June period, up 78.7 percent from a year earlier and 14.5 percent from three months earlier.

The earnings guidance was in line with a median forecast of 6.7 trillion won by 18 securities companies polled by Yonhap Infomax, the financial arm of Yonhap News Agency.

Samsung's second-quarter revenue rose 19.2 percent on-year to reach 47 trillion won, the company said. A net profit estimate was not provided.

Samsung is scheduled to unveil its quarterly earnings at the end of this month, the first report to be given after chief executive officer Kwon Oh-hyun was appointed to head the company.

The company did not give reasons for its estimate, but market watchers said brisk sales at its mobile business accounted for more than 4 trillion won of the total operating profit.

"The impact of the Galaxy S3 smartphone was maximized thanks to its sole competitor Apple Inc.'s delay in releasing a new product,"

Shinhan Investment Corp. Kim Young-chan said in a report, "More than 6 million units of the latest Galaxy phone have been sold since its rollout in late May, with sales likely to top 25 million units in the second half."

Kim predicted the company to sell a total of 204 million smartphones in 2012.

Samsung introduced the Galaxy S3 on May 29 in Europe as part of its efforts to jump-start demand in the US$219 billion global smartphone market ahead of its U.S. rival Apple's iPhone 5 release.

Samsung said shipments of the flagship phone will likely reach the 10 million milestone this month.

Samsung probably sold 49 million smartphones in the second quarter, lower than an earlier projection of 55 million, as supply issues hampered shipments, according to KB Securities Co.

Analysts said most divisions at the tech behemoth saw their operating profit rise in the second quarter from three months earlier despite concerns over the eurozone debt crisis and other negative factors.

Hanwha Securities Co. analyst Ahn Seong-ho said the company's liquid-crystal display (LCD) business likely swung to the black after six straight quarters of losses, adding its active-matrix organic light-emitting diode (AMOLED) business also continued to fare well.

Samsung's chip business with an estimated operating profit of 1 trillion won was hurt by weak dynamic random access memory (DRAM) and NAND chip prices. Market watchers, however, said it is expected to gather ground in the third quarter on the back of a price recovery.

Meanwhile, analysts said continued brisk sales of the Galaxy S3 as well as an improving chip sector will push the company's third-quarter operating profit to another record high.

"Mobile phones, rather than chips, are now Samsung's main growth engine. On the back of sustained mobile business growth, Samsung's operating profit is expected to easily reach the 7 trillion won level," said Choi Do-yeon, an analyst at LIG Investment & Securities Co.

Lim Do-ri of Shinyoung Securities Co. echoed the view.

"Concerns about the patent lawsuits and the iPhone release have already been factored in. A 7 trillion won level operating profit is viable."

Despite their business ties, Samsung and Apple have been locked in a patent war stretching 10 countries in four continents as they compete to dominate the global smartphone market.

Shares of Samsung Electronics were trading at 1,166,000 won, down 1.6 percent from the previous close, on the Seoul bourse as of 11:18 a.m.