Samsung Electronics said Friday its preliminary operating profit seems to have reached a three-year high in the fourth quarter of last year on strong chip and display sales, offsetting the Note 7 debacle.
The company said it expects to post 53 trillion won ($44 billion) in sales and 9.2 trillion won in operating profit for the period from September to December, 10.8 percent and 76.9 percent higher, respectively, than the previous quarter.
“(The highest quarterly profit) comes from rising DRAM prices, a growing demand for OLED (organic light-emitting diode) panels and strong sales of the Galaxy S7, which filled the gap left by the Note 7,” said Peter Lee, an analyst from NH Investment & Securities.
Although the world’s largest memory chip maker did not provide a divisional breakdown, its chip unit is predicted to have earned 4 trillion won in operating profit from the continued hikes in DRAM and NAND flash prices as well as the growing demand for memory chips for mobile devices and the weak Korean won against the greenback.
 |
Visitors try new devices at Samsung Electronics’ booth at the Consumer Electronics Show that opened Thursday in Las Vegas. (Yonhap) |
The firm’s display business is estimated to have posted around 1.2 trillion won due to the growing demand for OLED panels for smartphones. Global smartphone makers, including Apple, are increasingly adopting OLED panels -- due to its flexibility -- from Samsung, which has a more than 95 percent share in the global market.
Its consumer electronics unit is also expected to have posted more than 1 trillion won in operating income as its marketing strategies on lucrative premium products have paid off. Analysts said the sales rose due to the company’s premium products such as its QLED televisions and luxury kitchen appliances under its Chef Collection.
The IT and mobile unit, which was hit hard by the Note 7 fiasco, is expected to rebound from the sluggish third quarter on strong sales of the Galaxy S7 and S7 Edge. The mobile unit is expected to post around 2 trillion won in operating profit.
Samsung Electronics is projected to continue its upbeat earnings this year, as the favorable demand trend is expected to continue in the chip and display businesses, industry watchers said.
“Samsung’s operating income in the first quarter is expected to post mid-9 trillion won with a positive market outlook,” said Song Myung-seob, an analyst at HI Investment & Securities.
“In the first quarter, the average selling price of DRAM and NAND flash is expected to rise 11 percent and 5 percent, respectively (on the back of strong demand and short supply). The rollout of the new Galaxy series will also drive display panel sales up in the period,” Song added.
Meanwhile, Samsung Electronics’ smaller rival LG Electronics predicted disappointing quarterly earnings due mainly to its sluggish smartphone sales.
LG estimated its fourth-quarter sales to be 14 trillion won and operating loss at 35.3 billion won.
Although LG did not provide a divisional breakdown, the loss mainly comes from its money-losing mobile and communications unit, analysts predicted.
Despite the company’s major efforts to restructure and streamline products in the unit, the sluggish sales of its flagship smartphone G5 unveiled in March continued to affect its earnings through the fourth quarter, analysts said.
Industry watchers, however, provided an upbeat earnings outlook in the first quarter, predicting the tech giant’s restructuring efforts would pay off this year.
“The weak earnings in the fourth quarter will be the turning point for a turnaround. The mobile unit’s operating loss is expected to drop by up to 1 trillion won in the first quarter due to the early rollout of its upcoming smartphone G6,” said Kim Dong-won, an analyst at KB Investment & Securities.
By Shin Ji-hye (
shinjh@heraldcorp.com)
