Samsung Electro-Mechanics will earn an estimated 293.7 billion won ($244.75 million) in operating profits this year, 347.2 billion won ($289.3 million) next year, and 437.1 billion won ($364.25 million) in 2017, according to a report by Hyundai Securities on Tuesday.
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Wednesday’s estimate, which comes ahead of audited results to be released later this month, did not provide a net income figure or breakdown of divisional earnings.
Only a handful of securities firms expected Samsung would post an operating profit of 6.7 trillion won, and none suggested an estimate hovering above 7 trillion won, citing its sluggish smartphone performances.
Samsung Electronics today said it would post its first quarterly profit gain in two years, beating expectations as strong sales of chips and displays probably offset weakness in its smartphone division. Operating profit and sales are also projected to grow sequentially. After seven quarters in a row when profits fell, the Korean company’s recent restructuring – shifting resources away from the tough smartphone market and towards chips and displays – seems to be delivering results.
The release of new models by global rivals and the possible hike in the USA key interest rate are expected to stand as potential threats for Samsung in the current quarter, analysts said.
It appears that at least for a few aspects of the business, Samsung is doing well financially with the news that it predicts its Q3 earnings to show a rise in profits by 78pc thanks to its thriving semiconductor business.
A weaker won makes South Korean exports more competitive overseas and boosts corporate earnings when repatriated.
“Samsung’s [third-quarter] earnings surprise, despite internal and external difficulties, should be highly appreciated”, said Lee Ka-keun, an analyst at KB Investment & Securities. However, the entry of new low-priced smartphone vendors has posed a challenge to the company. At the time, Kim Hyun-joon, SVP at Samsung’s mobile unit, said: “In terms of the profitability of the high end handsets, it may not be as easy as before to maintain high margins”.
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“The general consensus right now is that the third quarter earnings will be lower than the second quarter”, said Jonathan Hwang, IT analyst at KDB Daewoo Research. The company also obtained a contract to supply chips for Apple. Analysts also expect the company’s consumer electronics segment to report an operating profit of 260 billion won, along with sales of 11.4 trillion won.
