Samsung Q4 profit leaps 50 per cent despite Galaxy Note 7 recall

24 January 2017, 11:52 AM
Samsung Electronics
Samsung Electronics

Samsung Electronics reported a 50 per cent jump in fourth-quarter profits on Tuesday despite the humiliating Galaxy Note 7 recall that hammered the reputation of the world’s largest smartphone maker.

The South Korean tech giant took another blow when prosecutors began investigating its involvement in a corruption scandal that has seen the country’s president impeached, and sought the arrest of the firm’s de facto leader Lee Jae-Yong.

In a statement, the group’s flagship subsidiary Samsung Electronics said it posted operating profits of 9.22 trillion won (USD7.9 billion) during the October to December period.

Earnings were “driven by the components businesses, mainly the memory business and the display panel segment”, it said, with the stronger US dollar also boosting profits.

Revenues were largely unchanged at 53.3 trillion won for the three months, the South Korean tech giant said.

For the full year, the firm said in a statement, “Samsung achieved solid results despite the Note 7 discontinuation in the second half”—the only reference to the debacle that saw the company withdraw its much-publicised device.

Operating profits for 2016 reached 29.2 trillion won, up 10.7 percent year-on-year, it said, even though revenues were almost flat at 201.9 trillion won, up 0.6 percent.

Analysts anticipate the trend will continue into 2017.

“We are expecting Samsung to post record-high profits

this year on the back of rising chip prices,” Greg Roh, an analyst at HMC Investment Securities, told AFP.

Separately, Samsung said in a statement it will buy back 9.3 trillion won worth of its own shares.

Samsung was forced to discontinue the Galaxy Note 7, originally intended to compete with Apple’s iPhone, in October after a chaotic recall that saw replacement devices also catching fire.

In total 3.1 million smartphones were recalled as authorities in the US and elsewhere banned them from use on planes and even from being placed in checked luggage.

Earlier this week Samsung blamed faulty batteries from two different suppliers for the incidents, which the firm previously estimated would cost it $5.3 billion.

Samsung has also come up with elaborate step-by-step safety verification procedures for future products to prevent similar disasters, although some analysts remained sceptical.

The findings suggested a lack of attention to product testing and a tendency to rush to market for competitive reasons at the expense of quality control, said Jan Dawson, chief analyst at Jackdaw Research.

“I have confidence that Samsung will make big process changes going forward, but less confidence that the culture that led to these problems will change in the same way,” he told AFP. 

First Published: Tuesday, January 24, 2017 11:45 AM

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