Samsung profits jump despite damaging Note 7 recall

PanARMENIAN.Net - Samsung Electronics on Friday, October 7 flagged a 5.5-percent rise in operating profits, even as it struggles with a damaging global smartphone recall and a shareholder push to split the family-run conglomerate in two, AFP reports.

In an earnings forecast that beat analyst estimates, Samsung said its operating profit for the July-September period would stand at around 7.8 trillion won ($7.0 billion), compared to 7.39 trillion won a year ago.

The estimate was down on the 8.1 trillion won profit posted in the second quarter.

The world's largest smartphone maker has had a turbulent time of late.

Just weeks after the early roll-out of the Galaxy Note 7 "phablet," Samsung was forced in early September to recall 2.5 million units globally following complaints its battery exploded while charging.

With images of charred phones flooding social media, the unprecedented recall was a humiliation for a firm that prides itself as an icon of innovation and quality -- and the timing of the crisis could not have been worse.

The Note 7 was meant to underpin growth this year as Samsung struggles to boost sales, squeezed by Apple in the high-end sector and Chinese rivals in the low-end market, as profit has stagnated, AFP says.

Analysts have estimated the cost of the recall at $1.0 billion to $2.0 billion.

Friday's forecast, which comes ahead of audited results to be released this month, did not provide a net income figure or breakdown of divisional earnings for the company's mobile, TV, semiconductor and display units.

It predicted third-quarter sales of 49 trillion won, down from 51.7 trillion won a year ago.

Analysts said the impact of the Galaxy recall on the mobile division appeared to have been mitigated by strong demand for memory chips and OLED display panels.

"The third quarter was affected by the Note 7 recall but at the same time, there were improvements in the semiconductor section," said Greg Roh, an analyst at HMC Investment Securities.

"For now, the situation is better than expected. The outlook for the mobile division in the next quarter isn't too bright, but it will be balanced against improved performances in memory chips, semiconductors and OLED display panels," Roh said.

Samsung's share price rose by as much as 1.2 percent in early trade after the announcement.