Samsung has forecast a 50% increase in Q4 profits despite the Galaxy Note 7 debacle of 2016, bringing some cheer to the New Year with this three-year high.
The last quarter of Samsung’s business was not too cheering, as the profits of the company had dropped by about 30%. This was primarily due to the debacle of the incendiary Galaxy Note 7. However, the company is in for some cheer in the New Year, as it has made a forecast of a 50% jump in profits for the fourth quarter of 2016.
Samsung has made an estimation of its operating profits to the tune of 9.2 trillion KRW or $ 7.75 on the sale of 53 trillion KRW, which is almost $44.6 billion. The prediction is lower than the booking made a year ago for the fourth quarter of 2015 by nearly 1%.
The news of the increased profits is quite surprising, especially after the debacle of the Galaxy Note 7. The faulty batteries and the recalling of the device and later complete termination of production of the handsets is common knowledge now. At the time, it was tipped off that the debacle could cause a huge damage to the reputation of Samsung and could result in plenty of financial damage to the company. Samsung had discontinued the sale of the Galaxy Note 7 devices after two months of the launch in August 19th 2016. In addition, the company also had to recall about 2.8 million of its washing machines sold in the United States, due to reports that the tops of the machines got detached while in use.
Weathers the Storm
According to Kim Sung soo, LS Asset Management funds manager, he has mentioned to Reuters that the company has been able to face the challenging situation due to the sale of its mid range smartphones. In addition, the components of the devices have also sold well and this along with the depreciation of the Won (Korean) has helped Samsung to weather the rough storm.
Profit from Other Sectors
There is a strong demand for components, such as the memory chip and the OLED display of Samsung. This will help the company make up the loss to an extent. It is expected that the chip sector of Samsung could make operating profits to the tune of more than $3.4 billion, due to its deals with Apple. In addition, it can make profits from the sale of top end data storage.
Fall in Total Revenue
It stands to reason that there will be a fall in the revenue of Samsung and it will have a profit loss to the tune of $2.1 due to the Galaxy Note 7 fiasco. However, the company seems to be well on the track to recovery. It is expected that the operating profits for the quarter from October to December will be around $7.8 billion. This is the highest amount since the third quarter of 2013 and it is much more than the highest expectations of analysts. The company will be disclosing its Q4 profit earnings towards the end of January this year.
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