Samsung Electronics reported a strong increase in third-quarter results, led by sales of its memory chips and growing demand for OLED panels. This helped offset a decline in profits from smartphones, hurt by tough competition and soft demand. Samsung said it expects a slowdown in results in the fourth quarter as seasonality affects the components business.
In line with the company's preliminary report, quarterly sales rose 5 percent year-on-year to KRW 65.46 trillion, and operating profit increased 20.9 percent to a record KRW 17.57 trillion. Net profit improved to KRW 13.15 trillion from KRW 11.19 trillion a year ago.
Mobile profit falls
At the mobile & IT division, sales were down 10 percent year-on-year but rose 4 percent from the second quarter to KRW 24.91 trillion. Operating profit declined to KRW 2.22 trillion from KRW 3.29 trillion a year ago.
Samsung said it achieved "solid sales" of its flagship models in the quarter, but total smartphone shipments were flat due to lower sales of mid- to low-end products. The drop in profit was due to increased promotional costs and a negative currency impact, as well as lower earnings for the networks business after the concentration of LTE investments by overseas carriers in the first half.
Looking to the fourth quarter, Samsung expects its smartphone shipments to increase during the year-end peak season, particularly for the new mid-range devices, the Galaxy A7 and A9. However, earnings are forecast to decrease due to increased marketing expenses.
The company expects smartphone market demand to increase slightly in 2019, mainly driven by premium segments. However, competition is likely to intensify across all segments as key features of premium models continue to expand to mid- to low-end models. Samsung said it also plans to bring more premium features to its A range, as well as confirming plans to launch foldable and 5G phones.
At the semiconductor business, Samsung reported revenues up 24 percent year-on-year and 26 percent higher versus Q2 at KRW 24.77 trillion. Operating profit improved to KRW 13.65 trillion from KRW 9.96 trillion a year earlier. The company said it expects demand to soften in the fourth quarter, after the recent ramp-up for the holiday season.
However, the solid earnings growth should continue in 2019, and the confirmed its intentions to target other mobile devices makers with its own SoC with 5G modem. The company will also focus on diversifying its product line-up to include 3D sensors, fingerprint-on-display sensors, and chips used in automotive and IoT applications.
