Rising Smartphone and TV Sales... Samsung Electronics Expected to Deliver Surprise Q3 Earnings

[Asia Economy Reporter Changhwan Lee] Market expectations are growing that Samsung Electronics' third-quarter earnings will significantly exceed forecasts.

On the 1st, the consensus operating profit estimate for Samsung Electronics' third quarter, as projected by the securities industry, stands at around 10 trillion KRW. However, recently, more firms have been revising their operating profit estimates for Samsung Electronics upward.

Meritz Securities expects Samsung Electronics' third-quarter operating profit to reach 11.4 trillion KRW, greatly surpassing the 8.1 trillion KRW recorded in the previous quarter. They analyzed that the IM division, mainly responsible for mobile, and the CE division, handling home appliances, will drive the surprise strong performance in the third quarter.

The IM division's expected third-quarter operating profit is 4.5 trillion KRW, more than double the 2 trillion KRW from the previous quarter. This is attributed to steady smartphone shipments (77 million units) and significant cost reductions amid a changed sales environment.

The CE division is also expected to record 1.3 trillion KRW based on cost reductions, largely offsetting the poor performance of the DP division (0.2 trillion KRW). For semiconductors, operating profit is forecasted at 5.2 trillion KRW, slightly down from 5.4 trillion KRW in the previous quarter.

Hyundai Motor Securities also anticipates Samsung Electronics' third-quarter operating profit to reach 11.7 trillion KRW. Their estimated operating profits by division are 5.5 trillion KRW for semiconductors, 0.5 trillion KRW for displays, 4.6 trillion KRW for IM, and 1.1 trillion KRW for CE.

Notably, despite price declines in DRAM and NAND products, the semiconductor division's profits are expected to slightly improve compared to the previous quarter.

Additionally, third-quarter shipments of smartphones and tablet PCs are expected to approach 80 million and 10 million units respectively, with IM operating profit projected to rise significantly due to economies of scale from rapid external growth and efficient marketing expenditure.

Researcher Geunchang Noh of Hyundai Motor Securities stated, "Despite the decline in memory semiconductor prices, Samsung Electronics is expected to deliver an earnings surprise in the third quarter, with operating profit exceeding previous estimates by 17.1%, driven by improved semiconductor division profits through an increased share of premium products and cost reductions, as well as strong performances from IM and CE."