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Galaxy S3 to push Samsung profit past $6.7b

Publication Date : 10-09-2012

 

Samsung Electronics is expected to post record earnings again in the third quarter this year, and enter an era of 7 trillion won in operating profit, despite remaining legal challenges with Apple and the global economic slowdown.

The world’s largest tech company by revenue is estimated to achieve some 7.6 trillion won ($6.7 billion) in operating profit from July to September, up 78 per cent from a year ago.

Its sales will increase 24.5 per cent to 51.4 trillion won in the same period, according to a survey of securities firms by FNGuide, a financial information service provider.

The tech giant posted an operating profit of 6.7 trillion won in the second quarter of this year, up 79 per cent from a year ago, with revenue of 47.6 trillion won, up 21 per cent.

Samsung’s brisk third-quarter growth will mainly be attributed to rapid global sales of its flagship Galaxy S3 smartphone, which passed a sales milestone in a short period of time, analysts said.

Samsung said that it sold more than 20 million Galaxy S3s worldwide in 100 days since the smartphone’s introduction, which will continue to sustain the company’s mobile communication business and serve as a growth driver.

KDB Daewoo Securities analyst Song Jong-ho said Samsung is likely to achieve more than 7 trillion won in operating profit as global sales of Galaxy S3 have already surpassed the initial estimate of 15 million.

Kim Hyun-joon, vice president of mobile communications, said during a second-quarter earnings call that Samsung expects sales of mobile handsets to increase by about 10 percent in the third quarter.

However, the company remained cautious even though it expects to see an increase in demand for smartphones toward the year-end holiday season despite “fiscal instability in Europe,” which is one of Korea’s biggest export destinations.

Lee Sei-cheol, an analyst of Meritz Securities, also said that Apple’s latest lawsuit against Samsung’s newest products, including Galaxy S3, over key user interface features in addition to a sales injunction against several of its old smartphones will have limited effect on Samsung’s bottom lines.

Although the ongoing legal dispute between the tech giants will continue to bring up the “noise,” Samsung is expected to counter this with mass customisation by introducing and embedding new technologies in its smartphones, the analyst said.

A court ruling over Apple’s latest claim against Samsung’s Galaxy S3 is likely to be reached in July next year when the Korean company is expected to launch its next Galaxy smartphone.

Lee forecasted that Samsung to post an operating profit of 27.3 trillion won for fiscal 2012, up more than 70 per cent from 16.2 trillion won in 2011.

FNGuide also showed that Hyundai Motor, Korea’s biggest automaker and second-largest conglomerate after Samsung Electronics, is expected to see a 13.4 per cent increase in operating profit to 2.3 trillion won in the third quarter.

However, the auto giant’s third-quarter earnings will decrease from the previous quarter due to seasonal factors as well as a labor-management dispute, analysts said.

 

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