Samsung Electronics Co., South Korea’s electronics giant, posted 5.85 trillion won ($5.2 billion) in net profit in the second quarter, led by brisk sales of both smartphones and home appliances, as well as a recovery in component sales. The company forecast earnings for the rest of the year will remain solid on the back of steady sales in both set and parts businesses.

The electronics maker announced on Thursday in a regulatory filing that the consolidated net income for the second quarter ended June jumped 11 percent to 5.85 trillion won from the first quarter. Operating profit surged 23 percent on quarter to 8.14 trillion won, the highest quarterly operating profit since the first quarter of 2014 when it hit 8.49 trillion won. The company surprised the market that projected the company’s operating income to reach 7.38 trillion won in the second quarter. Sales rose 2 percent to 50.94 trillion won over the cited period. Its operating profit margin for the June-quarter recorded nearly 16 percent, reducing gap with that of its major rival Apple Inc. to 7.85 percentage points, the narrowest ever.

For the first six months of the year, Samsung Electronics registered 14.8 trillion won in operating income, increasing from 12.9 trillion won in the first half last year. The sales marked 100.7 trillion won, rising from 95.7 trillion, during the same periods.

Samsung Electronics beat the market expectations in the second quarter after its both set and component businesses fared well, the company said in the statement. In particular, the company has invested 2.0 trillion won in semiconductor business in the April-June period and 1.6 trillion won in display business, to bolster the competitiveness of both divisions ahead of its rivals. It spent total 4.2 trillion won in capital investment in the second quarter and 8.8 trillion won for the first six months of the year, according to the company statement. The electronics maker’s capital investment this year is expected to rise slightly from last year and will likely focus on organic light-emitting diode (OLED) displays and vertical non-volatile storage (V-NAND) flash memory chip businesses of which demand is forecast to grow next year.

Fueled by strong sales of its flagship Galaxy S7 series smartphones that were released in early this year, the company raked in 4.3 trillion won in operating income from the mobile division in the second quarter, which is an 11 percent jump from the previous quarter and also the highest in two years since the second quarter of 2014 when it recorded 4.4 trillion won. The Galaxy S7 series were sold 1.6 million units in the second quarter only, remaining one of the bestselling smartphones in the world after the company increased sale volume of the popular Galaxy S7 Edge to around 50 percent and simplified the lineups of its lower-priced models A and J series phones.

The semiconductor division registered 2.6 trillion won in the second-quarter operating income, defending its profit amid price fall of its main product dynamic random access memory (DRAM) chips. The expanded orders for high-density mobile storage products from Chinese companies on top of its active response to the orders for high-density mobile products and enterprise solid state drives (SSDs) guided the electronics maker to overcome the unfavorable market condition in the second quarter, the company said.

Its display panel business in the June-quarter reversed to black in the second quarter. It posted 140 billion won in operating income driven by increased OLED panel shipments and enhanced new liquid crystal display (LCD) panel production technology. It registered an operating loss of 270 billion won in the first quarter.

The consumer electronics division posted 1.03 trillion won in operating income in June-quarter. It is a record-break operating income in seven years since it registered 1.06 trillion won in 2009 second quarter, also doubled figure from 510 billion won in the previous quarter. Its premium products, SUHD TVS and the Chef Collection refrigerator as well as other high-end home appliances boosted the electronics maker’s solid performance.

Meanwhile, the electronics giant announced the fourth and the final phase of its share buyback program worth 1.8 trillion won. The company in October 2015 released an 11.3 trillion won buyback program, and repurchased and canceled 5,630,000 common shares and 2,090,000 preferred shares amounting to 9.5 trillion won in total as of July. The final phase of the buyback program will begin on Friday and be executed during the next three months.

Samsung Electronics shares closed Thursday at 1,507,000 won, down 2,000 won or 1.31 percent from the previous session.

By Lee Seung-hoon

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