Samsung Electronics announced on Tuesday that its fourth quarter profits exceeded double the past year profits due to a surge in sales of its memory chip and smartphones, despite the Galaxy Note 7 fiasco.
In the October – December period, the South Korean company made profits worth $6.1 billion compared to $3.2 billion profits it had made a year earlier.
An analysis by a financial data provider, FactSet, had forecast a $6.52 trillion won.
In its regulatory filing, Samsung said that sales were flat at $45.6 billion. Operating profit surged 50 percent over a year earlier to 9.2 trillion won ($7.9 billion), in line with Samsung’s guidance earlier this month, reports Economic Times.
The world’s top smartphone, television and memory chips maker said that it expects a decline in its earning in the current quarter due to weaker TV sales and increased marketing for its mobile business.
Samsung has earned more than analysts expected despite the recall of its fire-prone galaxy Note 7 and the political scandal. Analysis has shown that the discontinuation of the Note 7 cost the company $5 billion from the third quarter. The number one Apple rival blamed the catastrophic Note 7 explosion on battery problems and manufacturing errors by suppliers. The flaws made the battery to overheat and at times explode.
Samsung’s semiconductor businesses hugely contributed to these profits, accounting for more than half of the quarterly operating profit. The semiconductor division alone brought home $4.3 billion as a result of increased demand for memory from server operators and mobile devise makers.
Struggle to gain consumer trust
Despite the challenge it faces in restoring consumer trust, in the absence of the Galaxy Note 7 smartphones, consumers snapped up Samsung’s Galaxy S7 and S7 Edge, released in spring 2016, and other cheaper Galaxy smartphones. That hugely assisted rebound the mobile business after cancellation of the Note 7. The mobile segment made $2.1 billion profits during the last three months of 2016.
As Samsung continues to up its OLED display in smartphones, demand for its devices grew in numbers. The OLED display business generated $1.1 billion as other smartphone makers increasingly sought its services.
While disclosing the earnings, Samsung said that it was going to buy back $8 billion worth of its shares so as to boost its market value.
Samsung’s Mobile Business Future
Apart from announcing the profits, Samsung has also given a preview of its future smartphones. It said that the next flagship device will integrate artificial intelligence so that one can voice-command the smartphones, just like Apple’s Siri. It also hinted on the possibility of a long-awaited foldable phone when it said it will introduce a “differentiated design”.
As at the moment, it seems Samsung was not hit that hard by the tormenting 2016 and partly 2017 discomforts.
When Samsung was asked whether investigations against its de facto head and apparent heir Lee Jae-yong, would impact the business, Samsung executive said its long-term strategies may be challenged.
Robert Yi, a senior vice president, told investors that the company minds domestic and global political uncertainties.