Samsung has a good Q3 thanks to consumer rebound

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Samsung has a good Q3 thanks to consumer rebound

Samsung Electronics' office building in Seocho District, southern Seoul. [YONHAP]

Samsung Electronics' office building in Seocho District, southern Seoul. [YONHAP]

 
Samsung Electronics posted its highest profit in two years in the third quarter, backed by resurgent demand for consumer electronics and smartphones — which sagged at the peak of the pandemic — and a sound performance in the semiconductor business.
 
The electronics giant said Thursday in a preliminary earnings report that operating profit between July and September was 12.3 trillion won ($10.7 billion), outperforming a market consensus of 10.4 trillion won compiled by tracker FnGuide.
 
That represents a 58.1 percent increase over a year ago and a 50.92 percent jump compared to the previous quarter, making it the best earnings since the third quarter of 2018.
 
Sales grew 6.45 percent on year and 24.6 percent on quarter to 66 trillion won during the quarter.
 
Samsung didn’t break down the results by division, but analysts expected the consumer electronics and smartphone segments to do well.
 
Lee Soon-hak, an analyst at Hanwha Investment & Securities, estimates that operating profit from the consumer electronics business soared 172 percent to 1.5 trillion won in the last three months compared to the same period last month. Compared with the previous quarter, which was hit hard by the pandemic, that third quarter earning projection is up 105 percent.
 
Increased demand for smartphones is another contributor. Lee expected the mobile sector to record 4.7 trillion won in operating profit, up 141 percent from the second quarter and a 61 percent rise over a year ago.
 
“The earnings surprise was driven by brisk sales of electronic devices such as smartphones and televisions, which generated higher-than-expected profits,” Lee said.
 
The chip business, a mainstay of Samsung, is also expected to have maintained profits surpassing 5 trillion won, according to Lee and other analysts. One factor is Huawei’s rushed stockpiling of chips in the face of strengthened U.S. trade restrictions.
 
“It is likely that the shipment of semiconductor products soared due to Huawei’s rush order,” said Song Myung-seob, an analyst at Hi Investment & Securities, adding that improved yield rates for dynamic random-access memory (DRAM) and 3D NAND memory chips also helped.
 
He predicted that the chip segment generated 5.6 trillion won in the latest quarter, up 3.1 percent from the previous quarter and up 83.6 percent over a year ago.
 
While the second quarter saw comparably robust chip demand backed by widespread working-from-home and increased online content consumption during the pandemic, 2019 was one of the worst years for the business because of a semiconductor market cycle that pushed down chip prices.
 
Song forecast that Samsung will pull off a similar success in profits in the fourth quarter, which typically enjoys strong sales of consumer electronics and anticipated large volumes of orders for server DRAM and mobile DRAM chips.
 
LG Electronics also reported sharp growth in both sales and profit, clinching the best third quarter in its history thanks to the public’s return to electronics consumption.
 
It registered 959 billion won in operating profit, up 22.7 percent over a year ago. Sales were up 7.8 percent to reach 16.9 trillion won. Those are the highest profit and sales for a third quarter for LG.
 
BY PARK EUN-JEE   [park.eunjee@joongang.co.kr]

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