Samsung Expects Its Third-Quarter Operating Profit to Be Much Higher Than

Operating income is estimated at 7.3 trillion won ($6.25 billion) for the July-September period, compared with the 4.06 trillion won posted a year earlier, Samsung said in a regulatory filing. The company will report its full results, including details of division earnings, later this month.

Samsung Electronics beat analysts’ expectations and posted its first quarterly profit gain in two years, which prompted a rise in its shares, as well.

Samsung has faced more pressure in the past year in the smartphone market, as its sales and profit margins have shrunk amid tougher competition from the likes of Xiaomi, Huawei and Lenovo in China as well as resilient sales of Apple’s (NASDAQ: AAPL) iPhone in the high end of the market.

Samsung Electronics flags a almost 80% jump in its third-quarter operating profit, which analysts put down to a weaker Korean currency and improved sales of televisions and semiconductors. The stock rose 8.69% to reach 1,251 Korean won yesterday, following the company’s report of higher-than-expected operating profit and sales for the quarter. While smartphone sales are sliding, Samsung’s chip business is powering its bottom line.

The results are likely to reflect the company’s robust chip and display business that was boosted by a weaker won, helping to offset continued weakness in its flagship handset business.

Investors in Samsung Electronics Co. are watching their holdings plunge as new Galaxy smartphones get a lukewarm public response. HMC Investment also expects the operating margin for mobile division to fall from 10.6% to 7.7% in third quarter. Samsung, which is spending 15.6 trillion won on a new plant in South Korea, said last month it wants to expand the logic, or processing, chips business to add to its leading position in memory.

Samsung has lost about $22 billion in market value – roughly equivalent to a Nintendo Co.- this year as sales of the S6 and Note 5 devices sputter against new models from Apple Inc. and Chinese makers. Samsung shipped about 81 million phones in the third quarter. Market analysts say the company’s earnings have mainly come from its semiconductor and organic light-emitting diode (OLED) sectors.

The last time Samsung’s quarterly operating profit rose above W7 trillion was in the second quarter of a year ago. But it is unclear if those measures will be enough to arrest the fall in the company’s smartphone profit during the fourth quarter.