By
Mayowa Adebajo
April 10th, 2024
For the just-ended third quarter, Samsung announced operating profit figures close to 16 million won. However, the figure was lower than expected.
Shares of Samsung Electronics (KRX: 005930) inched higher on Friday, representing its best quarterly profit in three years since Q3 2018. This came about after Samsung announced a 28% YoY increase in operating profit for the quarter ended in September. According to the tech giant, the figure now sits at 15.8 trillion Korean won (or $13.26 billion).
However, Friday’s figure was still some way off analysts’ estimate of 16.1 trillion won. “The mobile business’ operating margin might have been lower than the market expected,” stated Park Sung-soon, an analyst at Cape Investment & Securities. Sung-soon says confirmation depends on marketing costs and “the mix of products Samsung sold.”
Samsung’s shares rose over 1% in early trading and eventually trimmed some of those gains to trade at 0.42% higher. Furthermore, consolidated quarterly sales most likely surged to a record high of 73 trillion won. This represents a 9% increase from a year ago.
It should be noted that Samsung did not break down the performances of each of its business units. This also includes its highly profitable semiconductor business. However, global chip shortages are currently affecting the company’s operations. In addition, the pandemic closed down some of Samsung’s factories around the world. This is why the tech giant says its reported earnings fall short of the consensus estimate. As SK Kim, executive director and senior analyst at Daiwa Capital Markets, put it:
“Both revenue and operating profit [are] lower than our estimate, and market estimate.”
Samsung Operating Revenue for Q3 Impacted by a Number of Factors
The semiconductor shortage especially affected Samsung’s smartphone business and posed some logistics problems for its consumer electronics unit. This was according to Kim in a Friday session with CNBC’s ‘Squawk Box Asia.’ He also added that price increase in semiconductors likely affected the company’s components business.
Chip shortage is fast becoming an endemic problem within the smartphone industry. Tech powerhouses like Apple and Samsung initially insured themselves against this by stockpiling critical components like memory chips.
Towards the end of last month, Counterpoint Research reduced its smartphone shipment forecasts for the second half of 2021. According to the report, some smartphone manufacturers are experiencing a deficit in the components they ordered to make the devices.
Samsung will release the full results for its September quarter later this month. The shares of the largest phone manufacturer in the world are down by over 11% year-to-date. This is versus a 3% rise in the wider market, impacted by losses in September. The drop was evident when US peer Micron Technology Inc. announced its memory chip shipments would drop in the near future.
On the bright side, Samsung’s chip contract manufacturing unit will start producing cutting-edge chip designs in 2022. This is part of a tug-of-war with Taiwan Semiconductor Manufacturing Co Ltd for market share.