Samsung expects $8.2 billion profit in Q4 on chip, display business

Samsung forecast solid fourth-quarter earnings at $8.2 billion as its cash cow chip business apparently stayed afloat to cover mediocre performance in its mobile business

Samsung Electronics on Friday forecast solid fourth-quarter earnings at $8.2 billion as its cash cow chip business apparently stayed afloat in the face of the weakness of the US dollar and the resurgence of novel coronavirus infections to cover mediocre performance in its mobile business.

In its earnings guidance, the South Korean tech giant estimated its operating profit at 9 trillion won ($8.2 billion) for the October-December period in 2020, up 25.7 per cent from a year ago.

The fourth-quarter operating income estimate was lower than the market consensus of 9.3 trillion won in the data compiled by Yonhap Infomax, the financial arm of Yonhap News Agency.

Samsung projected its fourth-quarter sales at 61 trillion won in the three-month period, up 1.87 per cent from a year earlier. The figure is in line with the market forecast

On a quarter-on-quarter basis, Samsung's fourth-quarter estimate was down from its superb performance in the third quarter, when it racked up record sales of 66.9 trillion won and operating profit of 12.3 trillion won on the back of pent-up demand.

For the whole of 2020, Samsung expected its operating profit to reach 35.95 trillion won, up 29.4 per cent from a year earlier, with its sales to climb 2.54 per cent on-year to 236.26 trillion won.

Samsung, the world's leading memory chip and smartphone vendor, did not break down performances of its respective business divisions, saying it will announce the detailed earnings later this month.

Despite a drop in prices of memory chips, analysts believe Samsung's semiconductor business has racked up an operating profit of more than 4 trillion won to lead the company's performance in the fourth quarter.Analysts expect Samsung's mobile unit to post an operating profit of around 2.3 trillion won in the last three months of 2020.

"Samsung's smartphone shipments in the fourth quarter are estimated to fall by 20 million units from the previous quarter, so a revenue drop is inevitable," said Lee Seung-woo, an analyst at Eugene Investment Securities.

Samsung's consumer electronics (CE) business unit was also widely believed to have been hit by lockdowns in Europe, while the increase of marketing costs for the year-end holidays may have also affected its earnings, according to analysts.

Samsung's display business was expected to have posted robust earnings in the fourth quarter, with operating profit reaching around 1.5 trillion won, as its mobile OLED panel supply was to benefit from brisk sales of Apple's iPhone 12.

--IANS

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