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Samsung Electronics posts record profits, expects tougher Q4

The South Korean consumer electronics company reported record profits in its third quarter, but it expects a tougher fourth quarter due to weaker demand and foreign exchange risks.

Kyle Rodda KyleR_IG
Market Analyst, Australia

Publication date : 2018-10-31T11:27:37+0000

Samsung Galaxy Store

Source: Bloomberg

Samsung Electronics posted record profits for its third quarter (Q3), with the company cashing in on high global demand for its products, particularly its semiconductors, with the business unit recording higher earnings year-on-year and quarter-on-quarter (QoQ), the company said.

The South Korean electronics company reported ₩65.5 trillion ($57.4 trillion) in consolidated quarterly revenue in Q3, up 5.5% from a year prior, and ₩17.6 trillion quarterly operating profit, representing a 20.9% increase and breaking its previous record of ₩15.6 trillion that was set in its first quarter.

Samsung expects tougher Q4

Despite recording record profits, the company admitted that earnings from its memory chips – which accounts for around 80% of Samsung’s profits – are expected to decline due to weaker demand. To offset the fall in demand, the company is looking reduce its memory chip output next year.

Looking ahead to the fourth quarter (Q4), the company said that it expects solid demand to continue for its OLED business and expects its smartphone shipments to rise over the Christmas period, with particularly strong demand for its new Galaxy A7 and A9 products.

However, the company expects earnings to decline in Q4 due to increased marketing expenses, global trade issues and foreign exchange risks in emerging markets.

Weaker won helps Samsung

The Suwon-headquartered company’s Q3 results were supported by a weaker won which, against the dollar helped the business to record a positive QoQ effect of around ₩800 billion.

However, the company noted that the won strengthened against most major emerging market currencies, which weighed slightly on its set businesses like its smartphones.

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