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Samsung looks to reverse mid-year dip with Q3 numbers

07 October 2018

South Korea's LG Electronics Inc said on Friday its third-quarter operating profit likely rose 44.4 percent from the same period a year earlier, slightly below analysts' estimates.

The turnover for the period is expected to reach 65 trillion won, said Samsung Electronics, the world's leading manufacturer of smartphones and memory chips. That beat the previous record of 15.6 trillion won in Q1, 2018. Preliminary operating profit climbed 20.4 percent to 17.5 trillion won ($15.5 billion) on a 4.8 percent gain in revenue, in line with market expectations. Lower than expected sales of its flagship Galaxy S9 ensured this prediction came to pass, with the quarter bringing Samsung's slowest profit growth in more than a year.

Although the guidance report did not give details on the earning performance of each business, market experts believe the company's record-breaking performance was due to the company's semiconductors.

It was the biggest-ever quarterly profit in the company's history, surpassing the market expectations of around 17.2 trillion won (15.3 billion US dollars).

As indicated by Bloomberg and Reuters, however, the chip division is as yet its greatest business, on account of solid interest from data centers for distributed computing. Last year, Huawei recorded a 32% increase in device sales, to about 237.2 billion Chinese yuan ($30 billion). The division has been posting losses since the second quarter of 2017.

Nevertheless, analysts have sounded concern about the current lack of innovation in the smartphone industry. However, it's reasonable to assume that Samsung's display business played a big role.

While the company hasn't yet broken down the finances behind this monster quarter, Daiwa Capital Markets analyst SK Kim claims that Samsung's work on the new iPhones has been a major profit driver. "[Samsung Electronics] is facing a slowdown on earnings momentum, as DRAM prices has been falling since the fourth quarter". It was up 11.2 percent from the prior quarter.

Samsung looks to reverse mid-year dip with Q3 numbers