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Samsung to break record with W50tr in operating profit

Tech giant likely to post 63.8 percent growth in Q4 operating profit

South Korean tech giant Samsung Electronics is on path to become a company worth 50 trillion won ($46.9 billion), as its annual operating profit for 2017 is forecast to hit 53.6 trillion won, according to an earnings guidance released by the company Tuesday.

It is the first time for Samsung to obtain over 50 trillion won in operating profit for the whole year since its foundation in 1969, pushed up by an unprecedented global boom in the chips industry.

The company’s preliminary earnings showed that it is expected to post 239.6 trillion won in sales and 53.6 trillion won in operating profit for last year.

The annual operating profit nearly doubled from 29 trillion won in 2016. 

Such stellar growth performance last year is owing to the largest quarterly growth in the final quarter of 2017, according to the earnings guidance. 

(Yonhap)
(Yonhap)

The operating profit is estimated at 15.1 trillion won in the October-December period last year, up from 9.2 trillion won tallied during the same three months in 2016.

The figure marks a whopping 63.8 percent jump on-year.

Fourth-quarter sales are anticipated to surge 23.8 percent to reach 66 trillion won, the data showed.

More than 10 trillion won in operating profit is likely to have been generated by the company’s chipmaking division, according to the financial market.

The chips business is estimated to have earned around 35 trillion won in total last year, accounting for two-thirds of Samsung’s entire profit.

However, the results were slightly below market observers’ expectations.

FnGuide, a financial information provider here, had expected that Samsung would report a fourth-quarter operating profit of 15.9 trillion won.

Local brokerages had said in multiple reports that Samsung would hit new highs in sales and operating profit in the fourth quarter, but the figures would be less than market expectations, citing possibilities of the chip industry slowing down in the near future.

Some in the financial market said the lower-than-expected forecasts could be attributed to increased costs incurred from providing massive incentives to executives and employees at Samsung’s semiconductor business division, and possibly from the strong Korean currency against the US dollar.

After the estimated figures were released, shares of Samsung Electronics dropped to 2,531,000 won on the main bourse as of 2:30 p.m. Tuesday, down 2.69 percent from the previous day.

“Recent falls in the won-dollar exchange rate are impacting semiconductor exports directly,” said Kim Kyung-min, an analyst at Daishin Securities. “Samsung shares are expected to rebound only if the currency rate rises back.”

The tech giant is expected to elaborate on the results in a finalized report, which will be delivered later this month. 

By Song Su-hyun (song@heraldcorp.com)
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