Samsung’s operating profit sinks 56% in Q3

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Samsung’s operating profit sinks 56% in Q3

Samsung Electronics’ operating profit in the third quarter fell by more than half on year and sales dipped as well.

According to a preliminary report on Tuesday, the company’s operating profit nosedived 56.18 percent to 7.7 trillion won ($6.4 billion) compared to the same period a year earlier, while sales inched down 5.29 percent to 62 trillion won.

Compared to the previous quarter, however, Samsung’s operating profit jumped 16.67 percent, and sales rose 10.46 percent.

Samsung, which is the world’s largest producer of memory chips and smartphones, saw its highest sales on record in the third quarter last year, 17.57 trillion won, thanks to good demand for memory chips. Chip prices started falling in the fourth quarter of last year.

This year’s July-September figures are in line with projections by analysts. The average projection for Samsung’s third quarter sales was 61.5 trillion won and 7.2 trillion won for operating profit.

Samsung didn’t break down performances by divisions, but the conglomerate’s IT & mobile and display divisions are believed to have driven the growth, with the semiconductor division responsible for the declines.

According to a projection from NH Investment & Securities, Samsung was expected to have posted 2.5 trillion won in operating profit from its IT & mobile division, a 62 percent surge from the previous quarter, and 1 trillion won from the display division, a 35 percent jump from the second quarter.

Operating profit from the semiconductor division was estimated at 3.3 trillion won, a three percent decline from the previous quarter.

Similarly, Meritz Securities expected Samsung to have earned 2.5 trillion won in operating profit from the IT & mobile division, 1.2 trillion won from the display division (up 50 percent from the previous quarter) and 3.3 trillion won from the semiconductor division.

“Sales of the Galaxy Note10 and Galaxy A series are expected to have seen a boost following the rise in demand for the 5G network,” NH wrote in a report released Tuesday. “Steady sales of its own smartphones and those of its clients are seen to have helped its display division.”

Samsung unveiled its premium Galaxy Note10 in August. The conglomerate is also seen to have benefitted from the U.S. restrictions on Chinese rival Huawei Technologies that cut off access to Google’s Android services like the Google Play Store and Google apps for its mobile phones.

Samsung will likely see a 2 percent drop in operating profit in the fourth quarter to some 7.5 trillion won compared to the third quarter as DRAM prices continue to fall due to increased supply, according to the report from NH.

Meritz said the prices of NAND chips will stabilize in the fourth quarter with some of the products seeing an increase, but the increases will be limited to 10 percent.

Samsung Electronics’ shares on Tuesday inched up 2.41 percent to close at 48,900 won.

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