Samsung’s Profit Rises 16 Percent in 3Q

By KELLY OLSEN

SEOUL, South Korea – Samsung Electronics Co. said Monday that its net profit rose 16 percent in the third quarter on strong sales of its mainstay memory chips.

Samsung earned 2.19 trillion won (US$2.3 billion; euro1.8 billion) in the three months ended Sept. 30, the company said in a statement. Samsung posted net profit of 1.88 trillion won a year earlier.

Sales during the quarter rose 4.7 percent to 15.22 trillion won (US$15.9 billion; euro12.7 billion).

Samsung is the world’s largest memory chip maker and a top producer of consumer electronics, including flat-screen televisions, mobile phone handsets, MP3 players and laptop computers.

The result, better than expected, was Samsung’s third profit gain in the past four quarters.

The average estimate of nine analysts surveyed by Dow Jones Newswires forecast that the company would post a net profit of 1.9 trillion won (US$2 billion; euro1.6 billion) on sales of 15.32 trillion won (US$16 billion; euro13 billion).

Samsung said profit margins were boosted by its memory chip business as it took advantage of a global surge in prices of dynamic random access memory, or DRAM chips, due to a supply shortage to shift production from slower growth products.

Sales in its semiconductor business rose seven percent from the same period the year before, with memory chips rising five percent.

Samsung manufactures both DRAM chips, used in personal computers, as well as NAND flash memory chips used in digital cameras and music players like Apple Computer Inc.’s iPod Nano.

"We anticipate our key business units to experience significant tailwinds in the fourth quarter, a seasonally strong period," Chu Woo-sik, senior vice president and head of Samsung’s investor-relations team, said in the statement.

"Furthermore, our plan to invest an additional 1 trillion won to increase capacity of our memory-chip business is expected to create revenue opportunities next year," he said.

Samsung’s profit was also bolstered by strong performance in the company’s overseas units, particularly its plants that manufacture digital flat-screen televisions, said analyst Michael Min.

"Samsung’s fundamentals are quite good," said Min, a senior analyst at Korea Investment & Securities Co. in Seoul.

"The fourth quarter result will be better than the third quarter," he added, emphasizing that consumer sentiment during the normally seasonally strong quarter will likely be bolstered by the recent decline in oil prices.

Sales in Samsung’s liquid crystal display business sector 12 percent from the year before quarter, the largest gain among its different business areas.

Shares in Samsung, which released earnings about 50 minutes after the stock market opened, rose 1.4 percent to 653,000 won (US$681; euro545) at midday in Seoul, paring earlier gains.