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Samsung’s Q3 operating profits decline 30%, mobile business reports a massive 96% decline in profits

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Samsung Electronics today announced its third quarter earnings and they’re as lackluster as one might have expected them to be. Due to the unfortunate Galaxy Note 7 fiasco, financials of the South Korean giant have taken a heavy toll and they’re completely in line with the predictions made by the company a couple weeks ago.

Samsung glumly reported a Q3 operating profit of KRW 5.2 trillion(approx $4.6 billion), which is over 30 percent decline when compared with the same quarter last year. The revenue figures also trickled down to KRW 47.92 trillion, which is about 7 percent decline in comparison to this time last year. These number look more bleak when compared to the record second quarter earnings.

The mobile and IT business reported KRW 22.54 trillion in consolidated revenue, a 15 percent decline as compared to last year. Whereas the operating profits dwindled to KRW 0.10 trillion due to the demise of the exploding Galaxy Note 7. The operating profit in the third quarter dropped a humongous 96 percent year-on-year when compared to last year’s KRW 2.4 trillion.

Credits: Samsung Newsroom

While the surmounting losses in mobile business drageed the profit and revenue down low, the semiconductor and LCD business helped Samsung save some skin. The Semiconductor business posted KRW 13.15 trillion in revenue and KRW 3.37 trillion in operating profit, while the LCD business posted KRW 7.06 trillion in revenue and KRW 1.02 trillion in operating profit for this quarter. Its network business continued its profitability stride on the back of sales of LTE equipment.

As for the coming year 2017, Samsung expects its exploding phones and steep financials to finally stabilise. The company expects the mobile business to recover on the back of solid Galaxy S7 and S7 Edge sales. Samsung has recently also confirmed that it will not run away from its infamous Galaxy brand name and plans to relaunch new flagship smartphones sometime next year. With its next flagship, the company will not only focus on expanding sales with differentiated design and innovative features, but also on regaining consumer trust in its global image.

It also plans to boost the semiconductor and components business in Q4 to further compensate for the losses this quarter. This is also possible because Samsung is aggressively working on producing industry’s first 8 GB DRAMs. This recovery will also be led by increase in LCD business as compared to the flexible OLED panels.

Looking to 2017, the company will focus on achieving solid earnings growth through normalization of the mobile business while improving earnings for the components businesses through expansion of V-NAND and OLED panels,

reads the official press statement.


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