Business and Technology

Samsung Electronics posts record in Q3 despite smartphone struggles

Samsung Electronics 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.

Samsung Electronics

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.

“It was in line with expectation but this will be the peak,” Greg Roh of HMC Securities & Investment told AFP.

“I’m expecting a decrease in the fourth quarter across the company including semiconductors and smartphones to around 16.6 trillion won,” he said.

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.

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.

Samsung shares were down 0.35 percent in afternoon trading on the Seoul stock market.

Source: News24

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