Samsung record profits despite woes. Tells a bit of a story. Excess profits? #profiteering #BusinessNews
Samsung today recorded its biggest leap in profits for three years, up 50 percent year-on-year, showing that there is far more to the company than the Galaxy Note 7 saga.
The Korean giant reported an operating profit of KRW 9.22 trillion ($7.92 billion) on total revenue of KRW 53.33 trillion ($44.6 billion) for its Q4 2016 period. Samsung said its component businesses — which are responsible for memory chips and display panels — were the stellar performers with revenue rising 77 percent to $4.25 billion. A strong U.S. dollar was also a positive factor for its business.
Those figures are in line with a forecast made earlier this month, and Samsung also saw some growth for its annual financial figures. For 2016, it carded an operating profit of KRW 29.24 trillion ($25.11 billion) on total revenue of KRW 201.87 trillion ($173.36 billion), that’s up 11 percent and 0.5 percent year-on-year, respectively.
Despite the recall of the Galaxy Note 7 for safety reasons — Samsung gave its side of the story here earlier this week — being estimated to cost it $5 billion, the mobile business “registered gains” courtesy of the continued popularity of the Galaxy S7 and mid-range smartphones, the latter of which Samsung has increased its focus on. Despite that, Samsung Electronics — the unit that the mobile business falls under — saw sales drop around two percent year-on-year while profit was down 60 percent over the same period. Samsung said the latter was down to “B2B investments.”
Looking to the new year, Samsung said its focus will be on integrating more artificial intelligence into its products.
“Looking at the mid- to long-term, based on paradigm shifts in the IT industry from the growth of IoT, AI and automotive businesses, new demand is expected to spur growth in the components business,” it added.
Initially, though, the firm is expecting a tough first quarter of 2017 with “weak demand for smartphones and tablets forecast due to seasonality.” It expects that its mid-range devices — like the new Galaxy A and Galaxy J series — will sell well but it will increase its spending on marketing and promotions during the quarter.