Samsung Electronics' preliminary operating profit halves in Q2

Source: Xinhua| 2019-07-05 14:20:55|Editor: Wu Qin
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SEOUL, July 5 (Xinhua) -- Samsung Electronics, South Korea's tech giant, saw its operating profit more than halve in the second quarter on the prolonged downturn in business cycle of the global semiconductor industry, the company said Friday.

The preliminary figure for consolidated operating profit reached 6.5 trillion won (5.6 billion U.S. dollars) in the April-June quarter, down 56.3 percent from a year earlier.

It was around one third of the company's record quarterly profit tallied in the third quarter of last year. Samsung's operating profit had stayed above 10 trillion won (8.5 billion U.S. dollars) for the seventh consecutive quarter to the fourth quarter of last year.

The preliminary revenue diminished 4.2 percent over the year to 56 trillion won (47.8 billion U.S. dollars) in the June quarter.

Net income and the detailed earnings of each business will be announced later this month after external audit and the board of directors' meeting.

Samsung's sharp profit fall was attributed to the protracted downturn in business cycle of the global semiconductor industry that led to lower chip price.

Hit by the global chip downturn, South Korea's export kept sliding for seven straight months through June.

During the January-June period, Samsung's operating profit amounted to 12.73 trillion won (10.9 billion U.S. dollars), tumbling 58.3 percent compared with the same period of last year.

However, Samsung's operating profit gained 4.3 percent in the second quarter compared with the previous quarter. Revenue also expanded 6.9 percent from three months earlier.

Samsung said in a regulatory filing that the preliminary earnings included a one-off profit relevant to display panels, but the company did not elaborate on it.

Samsung's chip-making unit was estimated to have recorded an operating profit of about 3 trillion won (2.6 billion U.S. dollars) in the April-June quarter.

It was down from 4.12 trillion won (3.5 billion U.S. dollars) tallied in the previous quarter, plunging from the quarterly high of 13.65 trillion won (11.7 billion U.S. dollars) in the third quarter of last year.

The semiconductor business had been forecast to rebound in the second half amid the recovered demand for chips, but the optimistic forecast was blurred as Japan imposed export restrictions on three materials vital to South Korea's tech industry.

The materials, including fluorinated polyimide, hydrogen fluoride and resist, are used to produce chips and display panels and inevitably affects the manufacturing of TVs and smartphones.

The export restrictions would negatively influence the domestic chipmakers, including Samsung, but some of South Korean experts forecast that it could be an opportunity for local tech firms to reduce their excessive chip inventory that led to lower chip price.

The experts noted that the export curbs could also become an opportunity for South Korean suppliers to push for the development of homegrown materials, which had been blocked by the dominating Japanese suppliers.

Samsung's display panel business was estimated to have turned into black in the second quarter thanks to the one-off profit.

Operating profit for the company's smartphone-making division was estimated to have fallen in the quarter on the delayed launch of its foldable smartphone, but the consumer electronics unit's profit was believed to have increased in the June quarter.