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Samsung Electronics posts record in Q3 despite smartphone struggles
SEOUL, Oct 31, 2018 (BSS/AFP) – Samsung Electronics on Wednesday posted
record quarterly operating and net profits for the July-September period as
solid demand for its memory chips cushioned the fallout from slowing
smartphone sales — but warned of tougher times ahead.
The South Korean tech giant — the world’s top maker of smartphones and
memory chips — has recovered from a series of setbacks, including a
humiliating recall and the jailing of its de facto chief, to post a series of
record-breaking numbers.
The profits have been driven by its mighty semiconductor unit, which
provides chips for its own devices as well as competitors including Apple.
But that run was coming to an end, Samsung signalled in a statement,
saying that it expected “overall earnings across the company to decline” in
the fourth quarter due to seasonal factors in the semiconductor market.
Going into 2019, “earnings are forecast to be weak for the first quarter”
for the same reason, it added, before business conditions improved.
For Q3 2018, Samsung reported operating profit of 17.6 trillion won ($15.4
billion), up 21 percent from a year ago and a record for any quarter.
Net profit also jumped 17.5 percent year-on-year to reach 13.1 trillion
won for the July-September period, also a record, while sales rose 5.5
percent to 65.4 trillion won.
The figures — in line with estimates announced earlier this month — were
“driven mainly by the continued strength of the memory (chip) business”,
Samsung said.
The unit dominates the global market and the firm has invested tens of
billions of dollars each year to build and expand its factories.
It reported an operating profit of 13.6 trillion won, the second
consecutive quarterly record, offsetting sagging profits at the mobile phone
division.
Mobile handsets once contributed the lion’s share of Samsung Electronics’
overall sales and profit, but the unit reported a third-quarter operating
profit of only 2.22 trillion won, down 33 percent year-on-year.
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Margins were squeezed in the face of growing competition with archrival
Apple for high-end devices, and Chinese firms churning out cheaper devices in
the mid- and low-end segments, where Samsung said sales fell.
But investors welcomed the figures and the firm’s share price was up 0.71
percent in morning trade on the Seoul stock market.
– Flagship unit –
Samsung Electronics is the flagship unit of the Samsung Group, by far the
South’s largest conglomerate and controlled by the founding Lee family.
It plans to invest a whopping 31.8 trillion won in production facilities
this year, it said, mostly to build and expand chip production plants.
It also vowed to expand mobile sales in the long term by rolling out new
technologies including much-anticipated foldable phones and artificial
intelligence installed in its devices.
Samsung’s reputation suffered a major blow from a damaging worldwide
recall of its flagship Galaxy Note 7 smartphone over exploding batteries two
years ago, which cost the firm billions of dollars.
The group’s heir, Lee Jae-yong, was also embroiled in a major corruption
scandal that ousted former South Korean President Park Geun-hye and spent
nearly a year in jail for bribing her close confidante.
The 50-year-old — the son of the current, ailing chairman Lee Kun-hee —
was released from jail in February after several of his convictions were
quashed on appeal.
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