Samsung Electronics expects to report its best quarterly results in more than two years in the second quarter of this year thanks to the sustained popularity of its flagship Galaxy S7 smartphones, the company said Thursday.
The world’s largest smartphone maker by shipments estimated an operating income of 8.1 trillion won ($6.9 billion) for the latest quarter, a 17 percent increase from the 6.9 trillion won posted a year ago.
Its revenue is also likely to increase 3 percent year-on-year to around 50 trillion won, the company said in its earnings guidance.
Up until May, the prevailing market expectation was that Samsung would likely stop short of reaching 7.5 trillion won in operating profits in the April-June period. But, the forecast has been revised up in recent weeks as Galaxy S7 and Galaxy S7 Edge, which were rolled out in March, witnesses strong sales, as well as a brisk increase in demand for its home appliances ahead of the summer season.
“Samsung Electronics’ earnings beat market expectations due to the strong performances in smartphone and consumer electronics,” said Lee Jae-yoon, an analyst from Yuanta Securities Korea.
Industry experts forecast the company’s information technology and mobile division posted operating profits of more than 4 trillion won in the second quarter, passing the 4 trillion won mark for the first time in eight quarters.
Operating profits were buoyed by high sales of the Galaxy S7 Edge, which accounted for more than half the total sales of the Galaxy S7 series, according to industry watchers. The price of the Galaxy S7 Edge, which costs around 920,000 won, is 10 percent more expensive than the Galaxy S7, which sells for 830,000 won.
Accumulative sales of the Galaxy S7 is expected to be around 260 million units -- with around 160 million units sold in the second quarter.
Samsung Electronics’ solid earnings are expected to continue in the second half of the year despite the rollout of Apple’s new iPhone 7 due to steady sales of in its semiconductor and display divisions
“The potential sales decline in smartphones will be offset by improving earnings of the semiconductor and display sectors,” said Song Myung-sub, an analyst of HI Investment & Securities.
The shipments of 3D NAND is expected to rise as there are high expectations on the third generation 3D NAND Flash, which began mass production late last year. Currently, Samsung is a major player in the 3D NAND Flash sector mainly used for solid-state disk drive.
As for the display sector, the LCD segment, which saw a massive loss in the first half, is expected to turn around thanks to high yield and rising LCD prices, according to market watchers.
By Shin Ji-hye (
shinjh@heraldcorp.com)
