Samsung expects Q3 profit to almost double from last year’s down quarter

The South Korean tech giant estimated its July-September operating profit would leap 79.8 per cent from a year earlier to 7.3 trillion won (S$8.9 billion), compared with 6.7 trillion won tipped by analysts.

The last time Samsung’s quarterly operating profit rose above W7 trillion was in the second quarter of previous year.

The vendor’s new Galaxy S6 edge+ smartphone and Note 5 phablet, unwrapped in mid-August ahead of Samsung’s usual schedule, likely prompted its mobile division to perform better than in prior quarters.

Hwang Min-sung, an analyst at Samsung Securities Co., said shipments of smartphones apparently surged to 83 million units in the third quarter from 72 million units three months earlier.

Samsung’s mobile unit likely posted an operating profit of about 2 trillion won, analysts estimate, up from 1.75 trillion won a year earlier. Samsung expects chip sales to generate its highest earnings for the fifth straight quarter.

However, the weakening of the won also had a detrimental effect on its sales of smartphones whose manufacturing and inclusion of components in a phone are typically manufactured in dollar terms, rather than the won, in this case.

Aside from the operating profit of Samsung, the company did not release any commentary for the results of the quarter. Samsung has not stopped there, going on to develop and introduce curved screen, changing from plastic to metal body, and resorting to price cuts after launch in order to boost sales of its new flagship Galaxy S6 as the sales fell short of the target in the third quarter.

Suwon, South Korea-based Samsung is now projected to report its first quarterly profit growth in eight quarters.

The positive guidance from the world’s biggest smartphone maker suggests that Samsung’s earnings may have bottomed out, ending a almost two-year decline from tepid sales and deteriorating profit from mobile phones.

The release of new models by global rivals and the possible hike in the US key interest rate are expected to stand as potential threats for Samsung in the current quarter, analysts said.

Operating profit at the consumer-electronics division, which oversees TVs and appliances, probably quintupled to 260 billion won on sales of 11.4 trillion won, according to the survey.

That’s set to end when Samsung announces its profits for the third quarter.

This is a good sign for the South Korean company, showing a path to recovery, but the competition from Apple, Huawei and Xiaomi is still fierce.