Samsung Electronics Flags Second-Quarter Profit Jump on Solid Chip Demand, One-Off Gains From Apple
Samsung Electronics flagged a 23 p.c rise in second-quarter working revenue on Tuesday, beating analysts’ estimates on stable chip gross sales to knowledge centres catering for a work-from-home economic system through the coronavirus pandemic.
The gross sales offset weak demand for smartphones and TVs, whereas one-off features from its show enterprise, which counts Apple as a buyer, additionally boosted earnings, the corporate stated. It gave no additional particulars.
The world’s prime reminiscence chip and smartphone maker stated working revenue was seemingly KRW 8.1 trillion (roughly Rs. 50,708 crores) within the quarter ended June, far above the KRW 6.Four trillion (roughly Rs. 40,058 crores) analyst forecast by Refinitiv SmartEstimate. It can be the best quarterly revenue because the fourth quarter of 2018.
Revenue seemingly fell 7 p.c to KRW 52 trillion (roughly Rs. 3.25 lakh crores) from a 12 months earlier, Samsung added, giving solely restricted knowledge in a regulatory submitting forward of its full earnings figures later this month.
Work-from-home orders and progress in on-line studying are underpinning chip demand amid the COVID-19 pandemic and pushing up DRAM reminiscence chip costs. US DRAM provider Micron Technology forecast sturdy quarterly income final month.
“Chip demand was stronger than expected due to the COVID-19,” stated Park Sung-soon, an analyst at Cape Investment & Securities.
Analysts stated the one-off show enhance mirrored a cost from Apple, with the US smartphone maker struggling to fulfill agreed cargo targets as iPhone gross sales take successful from the COVID-19 pandemic.
The cost was estimated at KRW 1 trillion (roughly Rs. 6,260 crores), larger than an analogous KRW 800 billion (roughly Rs. 5,009 crores) cost a 12 months in the past, they stated.
The handset and TV enterprise might have additionally fared higher than anticipated because of decrease advertising and marketing prices and as shops and factories resumed operations worldwide as international locations lifted lockdowns, analysts stated.
“The damage from the pandemic was less severe than the market had expected,” stated CW Chung, Nomura head of analysis in Korea.
Analysts, nevertheless, warned that will increase in reminiscence chip costs might not proceed within the second half of the 12 months as knowledge centre prospects are prone to be conservative in stockpiling chips given the resurgence of COVID-19 circumstances within the United States and different international locations
While costs jumped 14 p.c on common within the quarter, they had been flat in June versus May, knowledge from DRAMeXchange confirmed.
Shares of Samsung Electronics fell 1.Eight p.c, versus a 0.Four perceny fall within the wider market as of 0206 GMT (7:36 am IST).
The South Korean tech big’s resilient earnings regardless of the pandemic got here whilst its chief Jay Y Lee faces contemporary authorized troubles. State prosecutors are investigating Lee on suspicions of resorting to accounting fraud and inventory worth manipulation to win management of Samsung Group, Korea’s largest conglomerate. Lee’s attorneys have denied such allegations.
LG Electronics, Samsung’s crosstown rival in TVs, telephones and residential home equipment, in the meantime, stated its second-quarter working revenue seemingly fell 24 p.c toKRW 493 billion (roughly Rs. 4,082 crores), forward of a KRW 374 billion (roughly Rs. 2,343 crores) forecast by SmartEstimate.
Analysts stated easing of lockdown measures had helped demand for shopper electronics get well barely.
© Thomson Reuters 2020