Samsung's Q2 profit hits record high on chip sales, smartphone recovery

Source: Xinhua| 2017-07-07 10:17:34|Editor: Song Lifang
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SEOUL, July 7 (Xinhua) -- Samsung Electronics, the world's largest maker of semiconductors, smartphones and TVs, posted its record quarterly high of operating profit in the second quarter thanks to brisk chip sales and recovering smartphone sales.

Preliminary figure for operating profit was 14 trillion won (12.1 billion U.S. dollars) in the April-June quarter, up 72 percent from a year earlier.

It surpassed the previous record high of 10.16 trillion won tallied in the third quarter of 2013. The figure also topped market expectations of about 13.2 trillion won.

Revenue increased to 60 trillion won in the second quarter from 50.94 trillion won registered a year ago.

Net income and detailed earnings of each business unit will be disclosed later this month after external audits and the board of governor's approval.

Samsung's operating profit tumbled to 5.2 trillion won in the third quarter of last year as the discontinuation of the Galaxy Note 7 smartphone over its faulty battery dealt a blow to the tech behemoth of South Korea.

The profit, however, rebounded to 9.2 trillion won in the fourth quarter of last year and 9.9 trillion won in the first quarter of this year thanks to robust demand for Samsung-produced semiconductors.

Operating profit in the chip-making division was estimated at around 7 trillion won in the second quarter, topping the record quarterly high of 6.31 trillion won tallied in the first quarter.

Helped by the solid chip sales, Samsung's operating margin, which is the ratio of operating profit to revenue, posted 23.3 percent in the second quarter, up 7.3 percentage points from a year earlier. It was also the record high in the company's history.

Samsung's smartphone-making unit was estimated to have logged about 3.5 trillion won in operating profit thanks to recovering sales of Galaxy S8 devices. The unit's first-quarter profit was 2.07 trillion won.

About 5 million Galaxy S8 smartphones were sold across the globe less than one month after its release in April. Almost 20 million Galaxy S8 devices were estimated to have been sold until recently.

Divisions, which manufacturer display panels and consumer electronics, were also estimated to have logged more operating profits in the second quarter than the previous quarter.

Outlook for Samsung's second-half earnings was brighter on the back of higher memory chip prices, rising demand for OLED panels and the scheduled launch of Galaxy Note 8 smartphones.

Despite the rosy earnings outlook, Samsung shares declined in the domestic stock market on worry about vacuum of the company's leadership.

Samsung Chairman Lee Kun-hee has been hospitalized for heart attack for over three years. Lee Jae-yong, his only son and heir apparent to South Korea's biggest family-controlled conglomerate, has been in custody for suspicions of his involvement in corruption scandal that led to the impeachment of former President Park Geun-hye.

The current positive earnings came from active investment decision made by the leadership a couple of years ago, but the leadership vacuum made it almost impossible to make such investment decision.

Entering the Fourth Industrial Revolution era, experts raised voice that Samsung should push for active merger and acquisition (M&A) in the artificial intelligence (AI) and the Internet of Things (IoT) fields, but the preemptive M&A was difficult to be realized.