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Roundup: Samsung Electronics post earnings surprise in Q2 on smartphone sales

Xinhua, July 7, 2016 Adjust font size:

Samsung Electronics posted an earnings surprise in the second quarter, surpassing market expectations on strong sales of both flagship Galaxy smartphones and low-price models, a regulatory filing showed on Thursday.

The preliminary figure for operating profit was estimated at 8.1 trillion won (7 billion U.S. dollars) during the April-June period, far exceeding a market consensus of about 7.4 trillion won.

It was up 21.26 percent from the previous three-month period and up 17.39 percent from a year earlier. It marked the first time in nine quarters that Samsung's operating profit topped 8 trillion won.

After peaking at 10.16 trillion won in the third quarter of 2013, the operating profit declined to 4.06 trillion won in the third quarter of 2014, before bottoming out to 7.39 trillion won in the third quarter of 2015.

Revenue was estimated at 50 trillion won in the second quarter, missing market expectations of about 52 trillion won. It was up 0.44 percent from the previous quarter and up 3.01 percent from a year ago.

Revised figures for revenue and operating profit will be announced later this month after auditing accounts. Net income was not released at the preliminary announcement.

The ratio of operating profit to revenue posted 16.2 percent in the quarter, up 13.4 percent from the prior quarter. It was the highest in about three years.

More than half of the profit was generated in the mobile phone division. Samsung sold about 16 million Galaxy S7 smartphone series during the quarter, with low-price Galaxy models such as Galaxy A and Galaxy J sold strongly.

Consumer electronics unit was estimated to have generated over 1 trillion won in operating profit thanks to strong sales of the second-generation quantum dot TVs.

The semiconductor division's operating profit was estimated at about 2.5 trillion won due to brisk sales of NAND Flash memory chips that offset a fall in average selling price of DRAM chips.

The display panel unit was estimated to have posted an operating profit of about 200 billion won, turning around from a 270 billion-won deficit in the first quarter.

Expectations are running high for Samsung's positive earnings in the second half as demand for electronic devices tend to get stronger in the second half than in the first half.

Demand for electronic parts such as chips and display panels is expected to increase in the third quarter. Some experts predicted a 20 percent growth in shipments of DRAM and NAND Flash memory chips in the third quarter, raising the semiconductor unit's operating profit to 3.4 trillion won.

The display panel division is forecast to increase profitability in the third quarter thanks to demand for OLED panels that will be increasingly used by Chinese smartphone manufacturers.

Apple's iPhones are expected to use OLED panels in its new smartphones. Samsung has a market share of more than 90 percent in the global OLED market.

Samsung's smartphone business is expected to shrink in the third quarter as Apple's iPhone 7 is scheduled to be released in September. Samsung will roll out Galaxy Note7 next month. Endit