By Jun Ji-hye
Samsung Electronics is expected to post a record operating profit in the third quarter on the back of strong demands for memory chips, analysts said Wednesday.
According to the consensus among local brokerage houses, the Korean tech giant is expected to post 65.2 trillion won ($58.4 billion) in sales and 17.2 trillion won in operating profit.
The company is reportedly planning to announce its earnings guidance report on or around Oct. 5.
The market consensus marks a 5.1 year-on-year increase in the firm's sales and an 18.5 percent year-on-year increase in the operating profit for the July-September period.
If the consensus is correct, the firm's operating profit hits another record high after it posted 15.6 trillion won in operating profit in the first quarter of this year.
After Samsung suffered a series of batteries igniting on the Galaxy Note 7 in the third quarter of 2016, the firm has shown a continuous increase in its operating profit for the six consecutive quarters up to the first quarter this year.
But in the second quarter, the company's operating profit stood at 14.8 trillion won, failing to post record-breaking earnings due to weaker-than-expected sales of Galaxy S9 smartphones.
It has been generally assessed that the Galaxy S9 series, unveiled at Barcelona in February, failed to feature any significant improvements over its predecessors, resulting in a failure to attract more customers despite increasing marketing costs.
In the upcoming quarter, however, the firm is expected to show that it is still going strong, achieving the operating profit in the range of 17 trillion won.
Brokerage firms have analyzed that more than 75 percent of Samsung's earnings are expected to come from its semiconductor business.
“Shipments of both DRAMs and NAND-Flash chips will increase significantly thanks to the operation of new production facilities at the Pyeongtaek campus,” said Do Hyun-woo, an analyst at NH Investment & Securities.
DRAMs are crucial parts of computers, while NAND-Flash chips are used for mobile devices such as smartphones.
Meanwhile, the Korean company is forecast to see a decrease in its operating profit in the smartphone segment despite the launch of Galaxy Note 9. This is attributed to a continuous slump in sales of the Galaxy S9 while marketing costs are increasing.
On the yearly basis, the firm will likely record a combined 64 trillion won in operating profit. The firm's yearly operating profit a year ago was 53.6 trillion won.
“By the end of the third quarter, Samsung Electronics' operating profit is expected to exceed 47 trillion won, up by 24 percent compared to a year ago,” said Lee Seong-woo, an analyst at Eugene Investment & Securities, noting that there is a possibility for the profit to slow down next year due to a decreasing price of NAND-Flash chips.