BackSamsung surges as profit beats analyst estimates on components
Shares jumped 5.6%, the most since June 2013, to 1,215,000 as of 10:33 am in Seoul
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Seoul: Samsung Electronics Co surged the most in more than two years after posting third-quarter profit that beat analyst estimates on higher component sales.
Shares jumped 5.6%, the most since June 2013, to 1,215,000 as of 10:33 am in Seoul. Operating income jumped to 7.3 trillion won ($6.3 billion) in the quarter ended September, compared with the 6.7 trillion-won average of analyst estimates compiled by Bloomberg.
Semiconductors and displays are becoming central to reviving Samsung’s fortunes as it refreshes its Galaxy smartphone lineup to compete with Apple Inc’s iPhones and lower-end devices in China and India. The company sets prices for most components in US dollars, gaining a benefit when those sales are translated back into a Korean won which has dropped against the greenback.
“The result was a surprise and the biggest help was its component businesses," said Song Myung Sup, a Seoul-based analyst at HI Investment & Securities Co. “The chips and display units outperformed the product divisions, largely helped by the weaker Korean won."
The US dollar was about 12% higher against the won at the end of the quarter compared with a year earlier.
Sales rose 7.5% to 51 trillion won in the quarter, the Suwon, South Korea-based company said in a filing on Wednesday. That compares with the 50.6 trillion won expected by analysts.
Samsung didn’t provide net income or details of division earnings with audited results scheduled for later this month.
Beating IPhones
Operating profit from mobile devices probably rose 24% to 2.2 trillion won, the first year-on-year rise in seven quarters, according to the median estimate of six analysts surveyed by Bloomberg News. Sales are estimated to be 27 trillion won.
Samsung released the Galaxy S6 Edge Plus and Note 5 in August, beating the new iPhones to market by about a month. They debuted after lackluster sales of the premium Galaxy S6 prompted the company to cut prices and offer a $120 rebate to customers buying on installments or a leasing plan.
“The below-$200 devices largely contributed to the overall smartphone shipment increase in the third quarter," said Lee Seung Woo, an analyst at IBK Securities Co in Seoul. “S6 shipments have dropped significantly."
The average sales price is expected to have dropped by 14% to about $198 in the September quarter, Lee said. Samsung shipped about 81 million phones in the third quarter, according to a Bloomberg News survey of five analysts. The company shipped 72 million units in the previous quarter.
Chip research
Apple sold a record 13 million units of the new iPhone 6s and 6s Plus during their debut weekend last month. The average selling price for an iPhone during the previous quarter was $660, excluding carrier subsidies. Greater China accounted for 27% of Apple’s revenue in the June quarter.
Earnings from semiconductors, a business that supplies Samsung’s own devices and rivals including Apple, probably rose 54% to about 3.5 trillion won in the quarter, according to analysts. Sales are estimated to be 12 trillion won.
Samsung said last month it wants to expand the logic, or processing, chips business to add to its leading position in memory chips. The company opened a new semiconductor research- and-design center in Santa Clara, California, last month.
Apple orders
Despite falling prices of memory chips and slowing orders for application processors, division earnings will improve in the fourth quarter, largely driven by contract manufacturing for Apple, according to KB Investment & Securities Co.
Display earnings were probably 700 billion won, compared with 60 billion won a year earlier, according to the analyst survey. The unit makes liquid-crystal displays and screens using organic light-emitting diodes primarily installed in Samsung’s most-expensive Galaxy smartphones.
The stronger results were driven by larger smartphones and greater use of high-margin screens on Samsung’s lower-end devices as well as those from Chinese vendors. China will account for more than 30% of OLED shipments this year, up from less than 20% last year, according to Daewoo Securities Co.
Operating profit at the consumer-electronics division, which oversees TVs and appliances, probably quintupled to 260 billion won on sales of 11.4 trillion won, according to the survey. Bloomberg
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