Samsung posts record profit of W8.8 trillion in Q4

Samsung Electronics posted a record operating profit of 8.8 trillion won ($8.3 billion) in the fourth quarter of last year on the back of brisk sales of smartphones. It also surpassed the 200 trillion won mark in annual revenue for the first time.

In its preliminary earnings estimation, the world’s largest smartphone maker said Tuesday that the fourth quarter number has added up to a record-breaking annual operating profit of 29.01 trillion won

The fourth-quarter profit was up 88.8 percent from the previous year’s 4.66 trillion won. It is also a 9.2 percent increase from the previous three months.

The company posted a total of 56 trillion won in sales for the fourth quarter, bringing the annual total to 201.05 trillion won.

The numbers exceeded a previously announced market consensus of 8.5 trillion won estimated by local brokerages. The former quarterly record was the third quarter of 2012, when Samsung posted 8.06 trillion in operating profit and 52 trillion in revenue. It is the fifth quarter in a row for record profits from the electronics maker.

The firm has been fueled by the higher-than-expected sales of its Galaxy series of smartphones launched this year and the concomitant boost in its component business.

It overtook Finnish titan Nokia as the biggest shipper of handsets and currently competes with Apple in the lucrative smartphone sector.

According to company mobile boss Shin Jong-kyun, the firm is estimated to have sold over 40 million flagship Galaxy SIII handsets last year. The phones’ bigger-screened cousin Galaxy Note II was a hit too, selling more than 5 million.

Smartphone shipments for the fourth quarter are predicted to be around 61 million, adding up to a total of 200 million yearly.

By business unit, Samsung is estimated to have reaped 5.9 trillion won from its IT and mobile division, followed by a 1.6 trillion won operating profit in semiconductors, 1.2 trillion won in displays and 400 billion won in consumer electronics in the fourth quarter, according to a report by KDB Daewoo Securities.

Daishin Securities analyst Park Kang-ho said this year will show similarly high profits thanks to the sales of smartphones. “For the low-demand season of the first quarter we estimate an operating profit of 8.5 trillion won, and for the high-demand season of the second quarter, as high as 9.4 trillion,” he said.

The brokerage also believed that Samsung’s memory chip business that was faltering in the third quarter but recovered during the fourth quarter will also improve its margins. Its self-developed application processors that go into its Galaxy series handsets also boosted the numbers.

Prices of display panels that go into televisions and smartphones recovered along with rising demand, according to Dongbu Securities analyst Shin Hyun-jun ― especially liquid crystal displays (LCD).

“The sale of LCD TVs was good and we estimate 1.2 trillion won in operating profit and 9 trillion won in revenue,” said Shin.

The analyst said that the overall demand for parts has improved from last year, pointing out that a memory chip oversupply problem has been easing.

Official earnings results will likely be announced on Jan. 25, the last Friday of the month.

Despite the handsome earnings report, shares of Samsung Electronics closed at 1.5 million won on the Seoul bourse Tuesday, down 20,000 won or 1.32 percent from Monday’s close. <The Korea Times/Cho Mu-hyun>