Samsung Electronics Co. Ltd. revealed on Friday that its fourth-quarter profits for 2016 jumped by 50 percent to the highest level in over three years, in what looks likely to be a rapid recovery from its Galaxy Note 7 recall fiasco.
The increase in profits was in line with analysts’ expectations of big gains, which were attributed to the strength of Samsung’s semiconductor business, though the actual numbers surpassed even the most optimistic forecasts. Samsung’s semiconductor division profited from strong demand amid tight supply from September to December, contributing to around half the company’s earnings, Reuters reported.
Samsung posted operating profits of 9.2 trillion won ($7.8 billion), up from 6.1 trillion won in the same period one year ago. The result represents Samsung’s biggest quarterly profit since the third quarter of 2013. A Thomson Reuters StarMine SmartEstimate poll of 21 analysts poll had forecast profits of around 8.2 trillion won, Reuters said.
The increased profits came despite a small decrease in overall sales to 53 trillion won ($44.9 billion). Samsung did not provide a breakdown of its quarterly figures, which will be reported in full later this month. Overall, Samsung saw a 10 percent increase in its annual income for the year, its best performance in three years.
The result is extremely positive for a company that suffered from multiple product recalls in 2016, including the Galaxy Note 7 and one of its washing machines. Samsung has still not revealed exactly what caused the batteries on some of its Galaxy Note 7 phones to overheat and catch fire, a problem that led to two separate product recalls and the eventual discontinuation of the product last year.
Nonetheless, Samsung’s smartphone division appears to have recovered from the fiasco. Analysts said operating income from the division was probably around 2.3 trillion won in the fourth quarter, following a record low 100 billion won profit in the previous quarter.
Separately, Samsung has also become embroiled in the influence-peddling scandal that has led to the impeachment of South Korean President Park Geun-hye. The company has been accused of paying money to several organizations controlled by Park’s associate Choi Soon-sil, in order to win government approval for a merger of two Samsung affiliate companies.