By Kim Yoo-chul
Samsung Electronics posted a record operating profit in the second quarter of this year on the back of brisk sales of its Galaxy S4 (GS4) smartphones and improvements in its component business.
In a pre-earnings guidance released Friday, Samsung estimated that its operating profits reached 9.5 trillion won ($8.36 billion) between April and June, up 8.2 percent from a quarter ago. It was the biggest quarterly operating income in the company’s history.
Its revenue came to 57 trillion won during the same period, up 7.81 percent from three months ago. On a year-on-year basis, operating profits and revenue grew by 47 percent and 20 percent, respectively.
However, the earnings results were a bit below market expectations.
Market analysts expected operating profit to break the 10 trillion won mark. Accordingly, the firm’s stock price fell by 3.8 percent to close at 1,267,000 won Friday.
“We believe Samsung enjoyed continued success and shared gains in the lucrative high-end and premium segment. But the miss is due to a slowdown in handset margins and investment in other long-term growth initiatives such as Best Buy partnerships,” said Mark C. Newman, senior analyst at Sanford C. Bernstein in a note to The Korea Times.
Newman said Samsung will report another quarterly record in the third quarter helped by a rebound in margins of the firm’s handset business and high memory chip prices. Sanford C. Bernstein is an independent research unit of AllianceBernstein
“Samsung is cheaper than ever and provides an extremely attractive entry point,” he said, adding Bernstein still maintains its 2.5 million won target for Samsung stocks.
“Its consumer electronics businesses grew at a slow pace. That’s why Samsung has failed to report over 10 trillion won operating profit during the second quarter,” said Ahn Sung-ho from Hanwha Securities.
Samsung didn’t disclose numbers regarding divisional performances. The firm will unveil detailed second-quarter earnings results in the last week of July.
Market analysts estimated that its smartphone business created 6.6 trillion won in operating profit, accounting for more than 70 percent of the total, followed by memory chips with 1.7 trillion won, displays with 900 billion and consumer electronics with 300 billion won.
The mobile division led by co-CEO Shin Jong-kyun has been a critical cash-generator for Samsung over the last few years. It took up 74 percent of Samsung’s total operating profit in the first quarter.