Samsung forecasts a huge jump in profits

Samsung Electronics, one of the world “s major maker of smartphones, memory chips and TVs, said Wednesday that its third-quarter operating profit rose for four straight quarters, topping analysts” estimates.

Instead, favourable foreign exchange rates, such as South Korean currency’s sharp drop against the USA dollar, and strong performance in its display and chip businesses helped Samsung, according to the analysts.

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.

While commenting on the same topic, Lee Seung-woo, IBK Securities analyst said that the company was anxious to see that the overall earnings will continue to fall because in last past month the mobile profits also declined.

On the component front, the company’s advanced displays called OLED likely generated a fat profit because more Samsung handsets adopted those screens.

“The time has come to reassess the value of the company’s component sectors”, said Lee Jae Yun, an analyst at Yuanta Securities Korea.

“It is holding its own in the smartphone and tablet markets with a few strong new models like the S6 Edge and the Note 5”.

The extent of the expected quarterly profit gain, its first in two years, will do much to allay concerns that the South Korean tech giant’s earnings would not be able shake off the loss of smartphone market share to Apple Inc (AAPL.O) in the premium segment and to Chinese rivals at the lower end.

South Korean market analysts believe it will be a few time yet before Samsung can begin turning its smartphone business around with their estimates putting a significant return to profits in the division sometime after 2017. That cut the company’s loss in market capitalization this year by more than half.

After peaking at 10.1 trillion won in the third quarter of 2013, Samsung’s operating profit hit a bottom of 4.6 trillion won in the corresponding period of 2014 before climbing back up gradually.

Samsung had accurately predicted its Q2 profit result prior to the official release of its earnings. 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.

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