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Samsung Electronics Co. Ltd. said early Friday morning in South Korea that its fourth-quarter operating profit is expected to rise by about 26%, fueled by what analysts say was a surge in sales of computer chips and display panels.
The company reported operating income of 9 trillion won ($8.23 billion) in its preliminary fourth-quarter earnings forecast, up 25.7% from a year ago, and sales of 61 trillion won, up 1.87%. The operating income falls slightly short of analyst’s forecasts of 9.34 trillion won.
For the full year, Samsung said it expects operating income of 35.95 trillion won, up 30% from a year ago, on sales of 237.31 trillion won.
Samsung’s preliminary earnings guidance comes about two months after the death of its late Chairman Lee Kun-hee, the man who is credited with transforming the company into a global powerhouse as the world’s largest manufacturer of memory chips, smartphones and televisions.
Samsung’s sales take a hit in the early part of 2020 as the COVID-19 pandemic caused economic activity to come to a halt. But it has since benefited from a surge in sales thanks to pent-up demand following the easing of lockdowns across the world, South Korea’s Yonhap news agency reported.
Analysts say Samsung’s semiconductor business, which makes flash memory chips for servers, smartphones and other devices, will be the highest contributor to its operating income, just as it has been for several years. However, Samsung’s smartphone and other consumer electronics businesses are expected to report a decline in profitability from “seasonality and year’s end sales.”
Analyst Holger Mueller of Constellation Research Inc. said the strong quarter shows the resilience and strength of Samsung’s businesses. “Now all eyes are on the breakdown between the segments, which will be disclosed at the proper earnings call,” he said.
Samsung’s preliminary forecast only provides an estimate of its quarterly operating profit and sales. A full breakdown of its performance will be published when it posts detailed earnings later this month.
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