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Samsung profits soar, expects weaker Q4

Saf Malik
October 30, 2020

Smartphone sales rise sharply following flagship launches

Samsung reported its highest ever quarterly revenue thanks to “a boost in demand for smartphones and consumer electronics as well as efficient cost management”.

The vendor reported KRW 66.96 trillion (£45.5 billion) in consolidated revenue and KRW 12.35 trillion in operating profit for Q3 that ended September 30, 2020.

Samsung said that even after the coronavirus pandemic continued around the world, the reopening of the key economies led to a significant increase in consumer demand.

Quarterly operating profit rose 52 per cent from the previous quarter and Q3 operating profit was also 59 per cent higher year-on-year on stronger sales of memory chips and consumer products.

Strong smartphone sales

Samsung’s IT and Mobile Communications Division reported KRW 30.49 trillion in consolidated revenue and KRW 4.45 trillion in operating profit for the third quarter.

The Korean vendor’s smartphone sales rose sharply from the previous quarter, with the launch of new flagship models such as the Galaxy Note20 and Galaxy Z Fold2 as well as stronger sales of mass-market models in key regions including India.

While overall market demand is expected to increase in Q4, overall smartphone sales are expected to decline QoQ due to subsiding effects from new flagship launches.

Samsung’s profit margin will likely be affected by intensifying competition and Samsung aims to respond to this by strengthening its line-up for foldable phones and mass-market 5G models.

In Q3, Samsung’s capital expenditure reached KRW 8.4 trillion, including KRW 6.6 trillion spent on semiconductors and KRW 1.5 trillion on displays.

The full-year capital expenditure is expected at approximately KRW 35.2 trillion, including KRW 28.9 trillion allocated to semiconductors and KRW 4.3 trillion to displays.

The manufacturer plans to focus on flexible seasonal promotions and strengthen logistics and online marketing to improve profitability.

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