Abu Dhabi, UAESunday 18 August 2019

Samsung blazes further ahead with profits at record Dh36bn

Chip and smartphone maker extends global lead as earnings soar almost 150 per cent

Samsung Galaxy Note8 smartphones in Seoul. The firm logged a record profit of $10bn in the July to September period. Jung Yeon-Je/AFP
Samsung Galaxy Note8 smartphones in Seoul. The firm logged a record profit of $10bn in the July to September period. Jung Yeon-Je/AFP

The South Korean tech giant Samsung Electronics logged a record profit of 11.2 trillion won (Dh36.73bn) in the July to September period, it said Tuesday, its best for any quarter.

The world's biggest memory chip and smartphone maker has had its de facto leader jailed for bribery and faced a recall of its flagship Galaxy Note 7 device.

But its net profits soared 148 per cent on the same period a year ago, it said, thanks to strong demand for its memory chips and a recovery in smartphone sales with the roll-out of the new generation Galaxy Note 8.

The figures come only two weeks after chief executive Kwon Oh-Hyun resigned, saying the South's biggest firm was facing an "unprecedented crisis" and its current profitability was "merely a fruit of decisions and investment made in the past".

The firm described Tuesday's numbers as an "overall robust performance".

Operating profit nearly tripled on-year to 14.5tn won - also a quarterly record - it said in a regulatory filing, while sales surged to 62.05tn won, another all-time high.

Samsung Electronics is the key subsidiary of the sprawling Samsung Group, whose heir Lee Jae-Yong was found guilty in August of bribery, perjury and other charges stemming from payments to the secret confidante of ousted president Park Geun-Hye.

Lee, who was jailed for five years, says he is innocent and is appealing.

The 2017 Galaxy Note 7 recall - due to exploding batteries - also dealt the firm a crippling blow to its mobile business.

But its profits and share price have rocketed this year, as global chip prices have soared with suppliers such as Samsung yet to catch up on booming demand for high-powered processors used in handsets, computers and cloud storage servers.

The firm provides memory chips for PCs, servers and mobile gadgets of its own but also industry rivals including Apple, with that "component business" helping the firm cushion a fall in sales of its own devices.

It said separately it would double its dividends in 2018, and confirmed a further share buyback for the fourth quarter.

Samsung has sustained and widened its lead in the market partly by investing hugely in building and expanding semiconductor factories, often faster than its rivals.

Its investment in infrastructure, mostly on chip plants, will reach a whopping 46.2tn won just for this year, compared to 25.5tn won in 2016, it said.

The firm operates the world's biggest semiconductor plant in the city of Pyeongtaek, 70km south of Seoul, and is upgrading or expanding many of its production lines there and elsewhere.

Such aggressive investment has stoked concerns that its increased supplies may drive down prices and eventually dent the firm's own profits in subsequent quarters.

But the senior vice-president Chun Se-Won said: "We are looking at a longer-term horizon ... with a goal of boosting our business capabilities for the next two or three years and beyond."

Samsung shares rose 1.5 per cent to 2.74 million won in midday trading on the Seoul stock market.

Kim Yang-Jae, an analyst at KTB Investment & Securities, said profits would rise further in the fourth quarter, with global semiconductor prices continuing to rise into next year.

"Samsung's display unit would also see profits grow as it supplies panels to Apple's iPhone X," Mr Kim said, forecasting a new record operating profit of 15tn won in the fourth quarter.

Samsung predicted "positive growth" in the semiconductor business next year as technological advances in artificial intelligence (AI) and machine learning fanned demand for high-powered processor chips.

Updated: October 31, 2017 09:19 AM