Samsung Electronics report surge in net profits

  • 29/10/2015

Favourable exchange rates and a renewed focus on components have seen South Korea's Samsung Electronics pull out of an extended earnings dive, reporting a nearly 30 percent surge in third-quarter net profits.

The jump was a robust response to those who had warned Samsung would be unable to shake off the loss of smartphone market share to Apple Inc in the premium segment, and to Chinese rivals at the lower end.

Net profit in the July-September period stood at 5.46 trillion won (NZ$7.1 billion) - an increase of 29.3 percent on the previous year and snapping a streak of seven consecutive quarterly declines.

Though the size of the turnaround was partly due to the company's poor performance last year and a weakening Korean currency, it also showed the payback from investment in its semiconductor division.

"The memory market saw an increase in demand ... driven by an overall increase in capacity in chips and the launch of flagship smartphones and increased demand by data centres," the company said in an earnings statement.

Operating profit in the semiconductor business surged to a quarterly record of 3.6 trillion won, up 60 percent from a year ago.

Samsung sets prices for most components in US dollars and benefits when those sales are translated back into won if the Korean currency is weak.

The US dollar was about 11 percent higher against the won at the end of the quarter, compared with a year earlier.

"In the fourth quarter, the company expects earnings to decline from the earlier quarter, as it does not expect the foreign exchange rate to have such a positive effect," the company said.

Samsung's mobile unit also saw a 40 percent on-year increase in third-quarter operating profit, with a "significant increase" in sales of smartphones over the period, the company said.

However, price adjustments to the top end Galaxy S6 and Galaxy S6 Edge smartphones and increased shipments of mid-to-low end smartphones, meant the unit's net profit actually declined compared with the second quarter.