SEOUL: Samsung Electronics Co surged the most in more than six years after posting quarterly profit that beat estimates on higher sales of chips and screens.
Shares jumped 8.7%, the most since January 2009, to 1,251,000 won in Seoul. Operating income jumped to 7.3 trillion won (US$6.3bil) in the quarter ended September, compared with the 6.7 trillion-won average of analyst estimates compiled by Bloomberg.
Semiconductors and displays are becoming central to reviving Samsung’s fortunes as it refreshes its Galaxy smartphone lineup to compete with Apple Inc’s iPhones and lower-end devices in China and India.
The company sets prices for most components in US dollar, gaining a benefit when those sales are translated back into the Korean won, which has dropped against the greenback. “The time has come to reassess the value of the company’s component sectors,” said said Lee Jae Yun, an analyst at Yuanta Securities Korea Co.
“The third-quarter results threw a good signal that the two-year-long earnings downturn has finally ended.” The US dollar was about 12% higher against the won at the end of the quarter compared with a year earlier.
Sales rose 7.5% to 51 trillion won in the quarter, the Suwon, South Korea-based company said in a filing yesterday. That compares with the 50.6 trillion won expected by analysts. Samsung didn’t provide net income or details of division earnings with audited results scheduled for later this month.
Operating profit from mobile devices probably rose 24% to 2.2 trillion won, the first year-on-year rise in seven quarters, according to the median estimate of six analysts surveyed by Bloomberg News. Sales are estimated to be 27 trillion won.
Samsung released the Galaxy S6 Edge Plus and Note 5 in August, beating the new iPhones to market by about a month. They made their debut after lacklustre sales of the premium Galaxy S6 prompted the company to cut prices and offer a US$120 rebate to customers buying on installments or a leasing plan.
“The below-US$200 devices largely contributed to the overall smartphone shipment increase in the third quarter,” said Lee Seung Woo, an analyst at IBK Securities Co in Seoul. “S6 shipments have dropped significantly.”
The average sales price was expected to have dropped by 14% to about US$198 in the September quarter, Lee said. Samsung shipped about 81 million phones in the third quarter, according to a Bloomberg News survey of five analysts. The company shipped 72 million units in the previous quarter.
Apple sold a record 13 million units of the new iPhone 6s and 6s Plus during their debut weekend last month. The average selling price for an iPhone during the previous quarter was US$660, excluding carrier subsidies. Greater China accounted for 27% of Apple’s revenue in the June quarter.
Earnings from semiconductors, a business that supplies Samsung’s own devices and rivals including Apple, probably rose 54% to about 3.5 trillion won in the quarter, according to analysts. Sales are estimated to be 12 trillion won.
Samsung said last month it wanted to expand the logic, or processing, chips business to add to its leading position in memory chips. The company opened a new semiconductor research-and-design centre in Santa Clara, California, last month.
Despite falling prices of memory chips and slowing orders for application processors, division earnings will improve in the fourth quarter, largely driven by contract manufacturing for Apple, according to KB Investment & Securities Co.
Display earnings were probably 700 billion won, compared with 60 billion won a year earlier, according to the analyst survey. The unit makes liquid-crystal displays and screens using organic light-emitting diodes (OLED) primarily installed in Samsung’s most-expensive Galaxy smartphones.
The stronger results were driven by larger smartphones and greater use of high-margin screens on Samsung’s lower-end devices as well as those from Chinese vendors. China will account for more than 30% of OLED shipments this year, up from less than 20% last year, according to Daewoo Securities Co.
Operating profit at the consumer-electronics division, which oversees TVs and appliances, probably quintupled to 260 billion won on sales of 11.4 trillion won, according to the survey.
