Samsung Electronics recorded a significant improvement in the mobile business in the third quarter, driven by strong sales of the Galaxy Note 10 and A series handsets, and improved margins for mass-market models.
The mobile unit posted a 17 per cent year-on-year increase in revenue to KRW28.1 trillion ($24.1 billion), with operating profit for its whole IT & Mobile Communications division jumping 32 per cent to KRW2.92 trillion.
Samsung said the higher profit was due to cost reductions after a transition of its handset lineup, with double-digit growth in sales volume of the Note 10 in the quarter. The business was also helped by its expanded 5G product offerings and the launch of the Galaxy Fold.
Its network business reported higher earnings on growing commercialisation of 5G service in South Korea.
The vendor expects device shipments to dip sequentially in Q4, with flagship model sales weakening from their post-launch peaks, and profitability to decline due to increased marketing costs during the peak season. Its mass-market smartphones, including the A series, are forecast to maintain solid sales.
For 2020, Samsung expects significant growth of 5G devices as new networks are launched globally, while competition will remain fierce, Mobile Communications Business VP Lee Jong-Min noted. He said the company plans to introduce more 5G devices and foldable products to enhance its competitiveness and build a foundation for future growth.
On a group level, the vendor’s net profit plunged 53 per cent year-on-year to KRW6.11 trillion on consolidated revenue of KRW62 trillion, down 5.3 per cent.
Revenue from its Semiconductor division fell 29 per cent to KRW17.6 trillion due to weakening global demand for memory chips. The unit’s operating profit fell from KRW13.7 trillion in Q3 2018 to KRW3.05 trillion in the latest quarter.
The company said both the US dollar and euro strengthened against the Korean won, resulting in around a KRW4 billion gain in its quarterly operating profit, mainly in the component business.
Looking to 2020, it said uncertainties linger over the memory chip market as demand is expected to recover, but risks from global industry circumstances persist.Subscribe to our daily newsletter Back