South Korea’s electronics behemoth Samsung Electronics Co. on Friday released preliminary operating profit of 7.8 trillion won ($7 billion) in July-September period, down 4.2 percent from the previous quarter and up 5.6 percent from the year-ago period, beating market expectation thanks to rebound in the semiconductor and display sectors despite a global recall on premium Galaxy Note7 phone that is estimated to have cost the company around $1 billion.

The expense for replacing and refunding for the entire 2.5 million Galaxy Note7 phones sold around the world in the first month of release embedded with batteries with potential risk of explosion is estimated at 1.5 trillion won-1.6 trillion won. Sales of the water-proof phone with much-hyped iris scanner are projected to have sold 3 million, halved from forecast of 6 million due to spook about batteries and company’s self-imposed ban in just couple of weeks after the initial release.

Analysts and industry watchers predicted the world’s smartphone maker would have made a little over $6 billion in the scandal-hit quarter, but the company nevertheless was able to pull out a figure close to $7 billion even after reflecting $1 billion losses from the recall thanks to robust component business helped by rebound in the memory chip and display market.

Considering the retooled Galaxy Note7 phone have been flying off the shelves after they returned to shops and earlier-released sister phone Galaxy S7 series have been selling well, analysts believe the company’s operating profit from mobile devices could recover to around the second-quarter figure of 4.3 trillion won in the final quarter.

In the third quarter, the company, which is also the world’s top chipmaker, is estimated to have added more than 500 billion won to profits of 2.64 trillion won in semiconductor operation and 140 billion won in display division made in the second quarter.

Prices of mainstay dynamic random access memory (DRAM) chips and NAND flash rebounded from the past quarter and Samsung has unrivalled edge in high-performance three-dimensional NAND flash memory. If the chip division brings in profit of near 4 trillion won, the company is expected to recover operating profit of more than $8 billion in the final quarter to close the year in stellar note.

Growing demand and applications for flexible organic light-emitting diode (OLED) as panel option to money-losing liquid crystal display has also fueled growth in display operation as Samsung commands more than 90 percent of the OLED market.

The company’s Consumer Electronics (CE) division, which earned 1.03 trillion won in operating profit in the second quarter, continued to make steady sales thanks to brisk sales of premium television products.

The electronics company posted sales of 49 trillion won in July-September period, down 3.8 percent from 50.94 trillion won in the previous quarter and down 5.2 percent from 51.68 trillion won from the same period of last year. Overall sales have not been dampened after recall on Galaxy Note7.

As of 1:45 p.m., shares of Samsung Electronics were up 0.47 percent to 1,699,000 won from the previous session.

By Lee Seung-hoon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]