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Samsung’s Q3 earnings beat estimates despite Galaxy Note 7 recall

[THE INVESTOR] Tech giant Samsung Electronics on Oct. 7 released its third-quarter earnings guidance that beat analyst estimates following a large-scale recall of its latest Galaxy Note 7 smartphone.

The company predicted its July-September period operating profit could reach 7.8 trillion won (US$7 billion), up 5.5 percent from a year ago. Local analysts had estimated it at about 7.4 trillion won on average, according to FN Guide, a local fund tracker.

Revenue, however, was down 5.19 percent to 49 trillion won. 

Industry sources say the earnings figure is deemed to be pretty robust considering Samsung may have spent more than 1 trillion won to cover up the costs for the still ongoing recall program globally. The number of Note phones sold during the period is estimated at about 3 million units, which compared to the previous target figure of 6 million units.

Buoyed by the higher-than-expected earnings estimates, the firms shares also soared to 1,716,000 won, a record high over the past year, early in the morning. As of 1:33 p.m., the share was trading at 1,700,000 won, up 9.53 percent from the previous day.

Samsung provides its own earnings estimates each quarter for investors. The final announcement is scheduled to be made later this month.

The company didn’t offer breakdown profits in each business division.

According to analyst estimates, the flagship mobile business division is expected to see about 2 trillion won in operating profit, as compared to 4.32 trillion won in the second quarter.

That for the semiconductor business division is estimated to stand at about 3 trillion won while display and home appliance division is expected to have earned a combined 1.5 trillion won operating profit.

By Kim Young-won (