Samsung flags almost 80% jump in Q3 operating profit

While analysts attributed much of the earnings surprise to the weaker won, Samsung’s shares were on track for their biggest daily percentage gain in almost four years in midday trade as investors saw an end to successive quarters of declining earnings.

A recent weakening of the won – down 12 percent year-on-year against the US dollar by the end of the third quarter – helped boost profits since most sales of semiconductors and display panels to emerging markets are settled in USA dollars, he added.

While Samsung did not provide breakdowns for each sector, Meritz Securities estimated the IT and mobile arm in charge of the smartphone businesses to have posted an operating profit of 2.1 trillion won in the third quarter, down from the previous quarter’s 2.7 trillion won.

Wall Street analysts expected the South Korean electronics giant to achieve a profit of around $6.7 trillion won based on data compiled by Thomson Reuters SmartEstimate.

Samsung projects third-quarter sales to increase 7.5 percent to 51.00 trillion won from last year’s sales of 47.45 trillion won.

The numbers would mark the South Korean firm’s first quarterly profit growth in two years. Samsung’s former model, the Galaxy S6, did not meet sales expectations, leading the company to slash prices and give a $120 rebate to buyers going for the installment plan for their purchases.

Its semiconductor division is expected to have remained the top earner for the fifth straight quarter, analysts said.

Cost cutting measures and improvements in the management of smartphone inventory also aided the company, according to Yoo Eui-hyung, an analyst for Dongbu Securities.

He warned that the hike in Samsung shares seen Wednesday could end up being a “short-term event” if it turns out that the good results owe more to the currency factor than improved competitiveness in the IT and mobile communication division, which oversees smartphones. Its finalized earnings will be announced later this month.

For the first nine months of this year, Samsung’s cumulative revenue amounted to 153.5 trillion won, propping up forecasts that the company would achieve the sales target of more than 200 trillion won in 2015. 25 million ($1,084) in Seoul on Wednesday, up nearly 9% and increasing the firm’s market value by KRW 14.7 trillion. Lee Ga-geun, an analyst for KB Investment and Securities, commented that the third quarter’s average exchange rates are 7 percent higher than those of the second period.