Samsung bounces back with surprise Q4 profits

Samsung Electronics posted profit that beat estimates as buoyant memory chip prices helped the world’s largest smartphone maker bounce back from the death of its fire-prone Galaxy Note 7.

Operating income rose 50 per cent to 9.2 trillion won ($7.8 billion) in the quarter ended December, its biggest profit in three years, the Suwon, South Korea-based company said in preliminary results Friday. That compares with the 8.29 trillion-won average of analysts’ estimates compiled by Bloomberg in the past four weeks. Shares rose.

A persistent rise in chip prices spurred by Chinese demand and growth in displays using organic light-emit diodes mitigated the fallout from Samsung’s biggest corporate crisis, when incendiary Note 7s forced the Korean company to kill off the gadget. It still hasn’t revealed the results of a subsequent investigation into an episode that cost Samsung more than $6 billion and assured Apple. of the lead in premium devices. “It came in as a big surprise,” said Greg Roh, an analyst at HMC Investment Securities Co. “The biggest contributors are of course the memory chip business and OLED sales. The chip prices will continue to rally and may rise more than 30 per cent in the first quarter alone on sustained supply shortage.”

Shares of Samsung rose 2 per cent to 1,813,000 won as of 9:01 am in Seoul. The stock surged 43 per cent in 2016, after three straight annual declines. Samsung, which settles most component sales in US dollars, also got a lift from a weaker Korean won. The US dollar appreciated to 1,157.4 on average in the fourth quarter compared with 1,121.4 won in the previous three months, according to the Bank of Korea data.

Samsung is counting on its flagship Galaxy S line this year to repair its image and fire up a beleaguered mobile division.

Bloomberg