Samsung's Q3 earnings hit new high on smartphone, chip sales

Samsung Electronics, the world's largest maker of smartphones, memory chips and flat screen TVs, said Friday that its third-quarter operating profit hit a new quarterly high due to robust sales of its Galaxy smartphones and memory chips.

Operating profit was 10.16 trillion won (9.57 billion U.S. dollars) in the three months ending Sept. 30, up 26.08 percent from the same period of last year, the company said in a statement. The figure was up 6.64 percent from three months earlier, topping the prior record high of 9.53 trillion won in the previous quarter.

Sales increased 13.24 percent on year to 59.08 trillion won in the third quarter, breaching the prior high of 57.46 trillion won tallied in the second quarter. The reading was up 2.82 percent from three months ago.

Net income jumped 25.59 percent from a year earlier to 8.24 trillion won in the third quarter. The figure was up 6.06 percent from the prior quarter.

Brisk smartphone sales led the company's record-breaking earnings results. Samsung's smartphone sales reached 85 million units in the third quarter, up more than 10 percent from the prior quarter, according to estimates by Shinhan Investment Corp. analyst Kim Young Chna who estimated Samsung's third-quarter earnings exactly.

Samsung said that smartphone sales grew in the third quarter from the prior quarter due to rising low-end smartphone sales and persistent demand for high-end products such as Galaxy S4 and Galaxy Note3.

The IT & Mobile Communications division that makes handsets posted an operating profit of 6.7 trillion won out of revenue of 36.57 trillion won in the third quarter, accounting for more than 60 percent of Samsung's overall sales and profit.

Performance in the semiconductor business improved in the third quarter, with a 2.06-trillion-won operating profit and a 9.74- trillion-won revenue, both up from three months earlier.

Demand for server and mobile DRAM chips manufactured by Samsung became stronger in the third quarter as the company sought to shift into 20-nanometer-class production lines, Samsung said, noting that its competitive edge in the NAND flash memory sector was enhanced due to shift into the 10-nanometer-class production lines.

The Consumer Electronics (CE) business recorded an operating profit of 350 billion won in the third quarter, down from the 430 billion won profit in the prior quarter. The home appliance division also saw its revenue fall to 12.05 trillion won from three months earlier.

Global TV sales increased in the third quarter due to demand for ultra high-definition (UHD) TVs and large-sized products, but demand for air-conditioners weakened due to seasonality, leading to a reduction in the household appliance sector.

The display panel business saw its operating profit and revenue fall in the third quarter from the prior quarter due to a fall in selling prices for LCD panels and a rise in depreciation costs for OLED facilities that offset a gain in sales of OLED panels, the company said.

Samsung drew a rosy picture for the fourth quarter as seasonal demand would be stronger during the year-end shopping season, but it cautioned about lingering uncertainties in major economies and unstable currencies in emerging markets.

The company spent 6 trillion won on facility investment in the third quarter. For the first nine months of this year, capital expenditure totaled 15 trillion won.