Samsung tips huge jump in profit despite corruption scandal

Reuters
Reuters
Author

10 April, 2017

The report is a counter to the company's costly failure a year ago with the fire-prone Galaxy Note 7 device.

Samsung's operating profit reached 9.9 trillion won (8.7 billion US dollars) in the first quarter, the second-biggest quarterly profit in the company's history, a regulatory filing showed Friday.

In its preliminary earning guidance, South Korea's second-largest electronics maker said it expected operating profit of 921.5 billion won and revenues of 14.66 trillion won for the first quarter.

Samsung's Q1 earnings past year, meanwhile, stood at 49.78 trillion won (~$43.90 billion), with a 6.68 trillion won (~$5.89 billion) operating profit.

Samsung has been facing various challenges since a year ago, including the suspended production of the Galaxy Note 7 phablet and the arrest of the firm's de facto head Lee Jae-young in line with the corruption scandal that led to the ouster of South Korea's president. Samsung unveiled its latest flagship last month and the device will officially go on sale globally, including Canada, on April 21st.

Growing demand for more firepower from devices such as smartphones and servers have also helped push up margins for Samsung and its rivals in recent quarters.

Samsung has denied any wrongdoing and Lee has pleaded not guilty to the charges, with his lawyer contending the prosecution case is "full of contradictions".

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That would be its best quarterly profit in nearly four years and shows a recovery from the Galaxy Note 7 fiasco.

That compares with the 9.18 trillion-won average of analysts' estimates compiled by Bloomberg.

If Lee is convicted, it could throw a temporary wrench into Samsung's succession plans, but if history is any guide, he will most likely be able to run the company behind bars and return to his leadership role once he's released.

The Seoul-headquartered tech giant posted an operating loss of 35.2 billion won in the fourth quarter a year ago due largely to its struggling smartphone business.

Lee's arrest had raised concerns among conglomerates, called chaebol here, about the possible negative effect on Samsung's businesses, but it proved to be an unnecessary anxiety as seen in the better-than-forecast first-quarter earnings result.

SK Hynix Inc.is Samsung's main domestic rival for memory chips while LG also produces displays. The S8 was its first major smartphone launch since the fire-prone Galaxy Note 7 fiasco.


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