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Samsung Tips Profit Leapt 50 Percent Despite Galaxy Note 7 Fiasco

Samsung Tips Profit Leapt 50 Percent Despite Galaxy Note 7 Fiasco

By Associated Press | Updated: 6 January 2017 09:52 IST

Highlights

Samsung said it posted KRW 9.2 trillion in operating profit
Sales fell 1 percent to KRW 53 trillion
Samsung will share the root cause of the Galaxy Note 7 fire "very soon"

Samsung Electronics Co. said Friday that its profits in the last quarter of 2016 surged 50 percent to the highest level in more than three years, despite the Galaxy Note 7 fiasco.

Analysts had expected Samsung's profits to see big gains thanks to its mainstay semiconductor business, but the result surpassed even the most optimistic forecast. The semiconductor division cashed in on strong demand and a tight supply for microchips during the September-December period, likely contributing to more than half of its quarterly earnings.

In its earnings preview, Samsung said it posted KRW 9.2 trillion ($7.8 billion or roughly Rs. 52, 895 crores) in operating profit, up from KRW 6.1 trillion a year earlier. It was the biggest quarterly income since the third quarter of 2013.

Analysts polled by FactSet expected a figure of KRW 8 trillion.

Sales fell 1 percent to KRW 53 trillion ($44.9 billion). The company did not give net profit or breakdown figures for its businesses, which are due later this month.

For the full year, the South Korean tech giant saw a 10 percent gain in its annual income, its best result in three years.

(Also see: Samsung Unveils New Range of Smart Refrigerators and More at CES)

The result is a bright spot for the tech giant that reeled from multiple product recalls last year, including a popular smartphone and a washing machine.

The stellar financial results come as Samsung faces an investigation linking it to South Korea's biggest influence-peddling scandal that led to the impeachment of President Park Geun-hye. Samsung has already postponed its annual personnel reshuffle, usually announced in December, due to the scandal that has rocked South Korea.

Samsung Group faces allegations that Samsung Electronics and its affiliated companies paid money to foundations and a company controlled by Park's long-time friend Choi Soon-sil in order to get the government's backing in a controversial merger of two Samsung affiliates related to Samsung's father-to-son leadership succession.

The head of the national pension fund who allegedly pushed the fund to support the merger was arrested last month by prosecutors investigating the scandal. Samsung executives including the ailing chairman's son Lee Jae-yong will soon be summoned by investigators, according to local media. Lee had earlier denied the company had sought any favors, but admitted that it was "inappropriate" but "inevitable" to send money to Choi's company in Germany.

The public is still in the dark about why Galaxy Note 7 smartphones overheated and caught fire last year, which prompted two recalls and eventual discontinuation of the flagship product.

(Also see: Samsung Galaxy Note 7 Probe Results to Be Released This Month: Report)

Tim Baxter, chief operating officer at Samsung's US business, told reporters at the Consumer Electronics Show in Las Vegas on Wednesday that Samsung will share the root cause of the Galaxy Note 7 fire "very soon." Samsung has been investigating the phone for more than three months.

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