Samsung profit climbs on memory chips, smartphone displays
Seoul: Samsung Electronics Co. Ltd posted record earnings on robust demand for memory chips and sales of high-end displays for the iPhone X.
Net income rose to a record 12 trillion won ($11.2 billion) in the three months ended December, the Suwon, South Korea-based company said in a filing Wednesday. That compares with the 12.1 trillion won average of estimates compiled by Bloomberg.
Sales of memory chips and exclusive orders for the organic light-emitting diode screens in Apple Inc.’s most expensive phone have fuelled component profits and helping offset the impact of a rising won. The results draw a line under an eventful 2017 for the company, after heir apparent Jay Y. Lee was jailed for corruption even as its earnings and share price rose to a record.
“Regardless of where Jay Y. Lee is, the top priority for Samsung is keep up profit in the face of uncertainties from the strengthening won to the growing specter of protectionism,” Claire Kim, an analyst at Daishin Securities, said before the results. “Relief about the prospect of the market should spread among investors after the earnings announcement.”
Samsung shares were mostly unchanged at the start of trading in Seoul. The stock, which rose 41% in 2017, is down about 2% this year.
Operating profit for the quarter was 15.15 trillion won on sales of 66 trillion won, Samsung said, confirming preliminary numbers released earlier this month. Samsung said a higher Korean currency reduced profit by 660 billion won, and that it anticipates a “negative impact” from the fluctuations in the won and lower seasonal demand in the first three months of the year.
Operating profit from the chip division more than doubled from a year earlier to 10.9 trillion won. Spot prices for 4 GB DRAM chips surged 92% last year, according to data from InSpectrum Tech Inc.
The mobile division had profit of 2.42 trillion won. While Samsung remains the world’s biggest smartphone maker, it has fallen out of the top 5 in China and is being challenged by Xiaomi Corp. in India, the two most populous nations. Samsung plans to debut its new flagship smartphone, the Galaxy S9, next month, giving the iPhone X a new challenger. The South Korean company competes with Apple for high-end users while also trying to fend off challenges from Huawei, Oppo and other Chinese rivals for inexpensive devices.
Operating profit from display products rose to 1.41 trillion won and consumer electronics reported 510 billion won in profit.
“Samsung faces tough conditions abroad and its ability to ride them out depends on retaining its bargaining power through market shares and technological edges,” Kim said. Bloomberg