Samsung flags almost 80pc jump in Q3 operating profit
“Today’s surprise results show those blue days are finally over and lend support to the market that it’s about time to give Samsung another look”, Peter Yu, an analyst at BNP Paribas SA in Seoul, said yesterday. And a recent weakening of the South Korean currency, won, also helped boost profits since most sales of semiconductors and display panels to emerging markets are settled in dollars, analysts said.
Samsung sets prices for most components in USA dollars, gaining when the sales are translated back into Korean won, which has dropped against the greenback.
For the first nine months of this year, Samsung’s cumulative revenue amounted to 153.5 trillion won, propping up forecasts that the company would achieve the sales target of more than 200 trillion won in 2015. But analysts said it is still not clear whether those measures will be enough to arrest the fall in the company’s smartphone profit during the fourth quarter. Samsung launched a pair of new smartphone models-the Galaxy Note 5 and the Galaxy S6 Edge +-in August, advancing the timing of its launch by several weeks to beat Apple Inc.in the market.
Thanks to the upbeat performance in the third quarter, shares of Samsung Electronics spiked 8.7 percent to close at 1,251,000 won on Wednesday.
Whilst Samsung has posted an operating profit that kept them well in the black for each of the seven quarters that have since passed, Q3 2013 also remains the quarter with the company’s largest profit, coming in at 10.1 trillion won.
Third-quarter operating profit from the two business units are expected to increase by 500 billion won from the second quarter, said Choi Do-Yeon, an analyst at Kyobo Securities. Though overall phone shipments likely rose, the brokerage says the greater share of lower-end products and price cuts for the Galaxy S6 models weighed heavily on the company’s bottom line. That compares with the 6.7 trillion won average of analyst estimates compiled by Bloomberg. But it remains down 5.7 percent so far this year, underperforming a 4.7 percent advance for South Korea’s benchmark index due to the long-standing worries about its earnings outlook. Samsung shipped about 81 million phones in the third quarter.
He warned that the hike in Samsung shares seen Wednesday could end up being a “short-term event” if it turns out that the good results owe more to the currency factor than improved competitiveness in the IT and mobile communication division, which oversees smartphones.