Samsung flags profit jump despite recall cost
SAMSUNG Electronics flagged a 5.5 percent rise in operating profits, even as it struggles with a damaging global smartphone recall and a shareholder push to split the family-run conglomerate in two.
In an earnings forecast that beat analyst estimates, Samsung said its operating profit for the July-September period would stand at around 7.8 trillion won (US$7 billion), compared to 7.39 trillion won a year ago.
The world’s largest smartphone maker has had a turbulent time of late. Just weeks after the early rollout of the Galaxy Note 7 “phablet”, Samsung was forced in early September to recall 2.5 million units globally following complaints its battery exploded while charging.
With images of charred phones flooding social media, the unprecedented recall was a humiliation for a firm that prides itself as an icon of innovation and quality – and the timing of the crisis could not have been worse.
The Note 7 was meant to underpin growth this year as Samsung struggles to boost sales, squeezed by Apple in the high-end sector and Chinese rivals in the low-end market, as profit has stagnated.
The profit forecast, which comes ahead of audited results to be released this month, did not provide a net income figure or breakdown of divisional earnings for the company’s mobile, TV, semiconductor and display units.
It predicted third-quarter sales of 49 trillion won, down from 51.7 trillion won a year ago.
Analysts said the impact of the Galaxy recall on the mobile division appeared to have been mitigated by strong demand for memory chips and OLED display panels.
The world’s number two chipmaker has dominated production of faster, larger-capacity chips using a technology called 3D NAND.
The US hedge fund Elliott Management stirred the pot last week by unveiling a proposal to streamline Samsung, split the company in two, dual-list the resulting operating company on a US exchange and pay shareholders a special dividend of 30 trillion won ($27 billion). –