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Samsung Electronics tips record fourth quarter profit, misses expectations on strong won

Reuters  |  SEOUL 

By Joyce Lee

SEOUL (Reuters) - Electronics Co Ltd <005930. KS> on Tuesday estimated a 64 percent jump in fourth-quarter operating profit to a new record, but the guidance fell short of market expectations as the strong won and year-end bonuses dented profits.

The and smartphone rival said its October-December profit was likely 15.1 trillion won ($14.1 billion), compared with a 15.9 trillion won average estimate from 17 analysts surveyed in a poll.

Based on the guidance, Samsung's 2017 operating profit is likely 53.6 trillion won, compared to the previous year's 29.2 trillion won, putting the South Korean on course for a record annual profit as strong DRAM memory chip prices continued to fatten margins.

Revenue was estimated to have increased 24 percent to 66 trillion won, versus the analysts' average forecast of 66.8 trillion won.

did not elaborate on its October-December performance and will disclose detailed at the end of January.

The continued rise in the price of DRAM chips, in especially hot demand for data centre servers, more than made up for a drop in NAND chip prices and a stronger won, analysts said.

But the outlook for in 2018 is mixed, and shares have fallen 9.6 percent from their all-time high in early November as some investors bet on an end to the memory chip boom.

NAND chips, used in things like and USB drives, have entered a down-cycle and some analysts say DRAM market conditions also will soften later this year.

Others however expect DRAM supply to remain tight throughout 2018 as

O>, and expand data centres used for cloud storage and

The outlook for and other mobile devices, which analysts expect to contribute about 17 percent to Samsung's fourth-quarter earnings, is also uncertain due to competition from Chinese rivals in markets like and Asia, analysts said.

Tom Kang, research director at data provider Counterpoint, said Samsung's mobile division should show "moderate" shipment growth of about 1-2 percent in 2018.

Analysts expect Samsung's display profits to grow this year thanks to sales of organic light-emitting diode (OLED) screens for Apple iPhones as well as Samsung's own handsets.

South Korean exporters like will be keeping a close eye on the won in 2018. The currency traded as high as 1,058.8 against the dollar on Monday, its highest in more than three years.

(Reporting by Joyce Lee; Editing by Stephen Coates)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, January 09 2018. 05:34 IST