Samsung Electronics on track for record fourth-quarter earnings

Reuters  |  SEOUL 

By Joyce Lee

SEOUL (Reuters) - Electronics Co Ltd <005930.KS> is expected on Tuesday to forecast a record quarterly profit in the fourth quarter, as a world hungry for processing power and snaps up its and screens.

While a stronger won and falling NAND chip prices could take some shine off the performance, most analysts are tipping a strong quarter for the world's leading maker of semiconductors, and televisions.

The South Korean giant is expected to forecast a 74 percent year-on-year jump in operating profit in the October-December period to 16 trillion won ($15 billion), according to a survey of 16 analysts.

The company will issue on Tuesday ahead of full details on its performance later in January.

"Samsung's fourth-quarter earnings outlook is lower than initially expected, but it's mainly due to one-off costs. We remain positive as there's no notable change in market dynamics," said Lee Soon-hak, at & Securities.

Electronics shares closed at 2.554 million won on Thursday, a 11 percent drop from its all-time high of 2.876 million won in early November.

The stock fell sharply in late November after forecast that a down-cycle in NAND chips had started, ending a prolonged boom.

However, analysts say the continued rise of chip prices in the fourth quarter has more than made up for that, and many are forecasting supply to remain tight throughout 2018 as companies expand data centres.

Average prices of server and mobile surged 45 percent and 20 percent respectively over 2017, with further gains expected in the first quarter, according to DRAMeXchange, part of research provider

Samsung's display is seen reporting a quarterly profit of about 1.7 trillion won, up 27 percent from a year ago, on sales of organic light-emitting diode (OLED) screens for Apple Inc's X as well as Samsung's own handsets, according to analysts.

The company is expected to have sold a healthy 10 million Galaxy Note 8 phones since sales began in September, despite high-end segment competition with Apple, said.

Even so, the mobile is expected to report profit similar to the previous corresponding quarter's 2.5 trillion won, as marketing costs weighed.

South Korean exporters are struggling with the stronger won which traded near a three-year high at 1,062.2 per dollar on Thursday.

($1 = 1,067.5300 won)

(Reporting by Joyce Lee; Additional reporting by Cynthia Kim; Editing by Stephen Coates)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, January 05 2018. 04:57 IST