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Samsung Q2 Profit Surges

Samsung Electronics Co Ltd (SMSN.L,SSNNF.OB,SSNLF.OB) reported that its net profit for the second-quarter increased 88.9 percent to 11.05 trillion Korean won from 5.85 trillion won in the same quarter last year.

The components businesses drove significant earnings growth, reflecting strong memory demand for high-density DRAMs and SSDs for servers.

Operating profit rose 72.8 percent to 14.07 trillion won from 8.14 trillion won in the prior year.

Revenue rose 19.8 percent to 61 trillion won from 50.94 trillion won last year.

The Semiconductor businesses posted 8.03 trillion won in operating profits on consolidated revenue of 17.58 trillion won for the quarter.

The Display Panel segment posted 7.71 trillion won in consolidated revenue and 1.71 trillion won in operating profit for the quarter driven by increased sales of premium OLED displays and high-end, large-size LCD panels.

The IT & Mobile Communications (IM) Division posted 30.01 trillion won in consolidated revenue and 4.06 trillion won in operating profit for the quarter. Samsung's earnings significantly increased QoQ driven by the strong sales of the Galaxy S8 and S8+ smartphones.

Despite the strong sales performance of premium smartphones, Samsung's total smartphone shipments remained at a similar level QoQ, due to decreased sales of mid- to low-end products.

Looking into the third quarter, revenue and profit are expected to decline QoQ due to increased marketing expenses associated with the launch of the new Galaxy Note and the reduced launching effect of the Galaxy S8 and S8+.

Total capital expenditure (CAPEX) executed in the second quarter was 12.7 trillion Won, including 7.5 trillion Won for the semiconductor business and 4.5 trillion Won for the display segment. Although the capex plan for 2017 has not been finalized, the annual capex is expected to be significantly higher than the previous year.

Looking ahead to the third quarter, the company expects favorable semiconductor conditions to continue, although overall earnings may slightly decline QoQ as earnings weaken for the Display Panel and Mobile businesses. For the Display Panel Business, an increase is expected in initial start-up costs for the new OLED production line, and intensifying price competition is forecast from LTPS LCD in the mid- to low-end rigid OLED segment.

For the Mobile Business, earnings are forecast to decline due to increased marketing costs related to the launch of a new Note device, with reduced profit contributions from the Galaxy S8 and S8+.

Moving on to the outlook for second half, the company expects earnings to grow primarily from the component businesses, as conditions in the memory market are likely to remain favorable and the company expects increased sales of flexible OLED panels.

by RTTNews Staff Writer

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