Samsung Electronics set for best quarter in over 2 years on second quarter smartphone boost
Tech giant Samsung Electronics Co Ltd (005930.KS) is poised to issue guidance for its best quarterly profit in more than two years, propelled by a surge in mobile earnings on the back of robust sales of its flagship Galaxy S7 smartphones.
The South Korean giant will disclose its estimates for second-quarter earnings on Thursday, with analysts predicting a strong mobile division contributed to a 13 percent jump in operating profit from the same period a year earlier.
The average forecast from a Thomson Reuters survey of 16 analysts tips Samsung to report April-June operating profit of 7.8 trillion won ($6.8 billion), the highest since an 8.5 trillion won profit in January-March of 2014.
The mobile division of the world’s top maker of smartphones and memory chips was likely its top earner for the second straight quarter with a 4.3 trillion won profit, according to the survey. Samsung surprised many with better-than-expected first-quarter earnings, and issued guidance for a further pickup in April-June. [nL3N17U63E]
“Galaxy S7 sales are better than expected in the first half, and the semiconductor business is also outperforming rivals,” said KTB Asset Management’s Lee Jin-woo. The fund manager estimated the firm’s quarterly operating profit would also stay strong in both the third and fourth quarters at between 7 trillion won and 8 trillion won in each.
Samsung’s smartphone business had been squeezed before the start of this year between Apple Inc (AAPL.O), at the high end of the market, and Chinese rivals like Huawei Technologies [HWT.UL] in the budget segment. But the Galaxy S7 has provided a catalyst for the earnings rebound, likely putting the mobile business on track to record its first annual profit growth in three years.
Some analysts say Samsung shipped around 16 million Galaxy S7s in April-June, with a higher-priced curved-screen version outselling its flat-screen counterpart and boosting margins. Lacklustre sales of offerings from rivals such as Apple and LG Electronics (066570.KS) also helped reduced marketing expenses, they said.