Samsung Electronics third-quarter profit nearly triples to new record

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SEOUL (Reuters) – Samsung Electronics Co Ltd (005930.KS) said on Tuesday it will pay dividends of about 29 trillion won in the 2018-2020 period as it reported record operating profit for the three months through September, lifted by its largest-ever memory chip earnings.

FILE PHOTO: The logo of Samsung Electronics is seen at its office building in Seoul, South Korea, August 25, 2017. REUTERS/Kim Hong-Ji/File Photo

The world’s biggest maker of memory chips, smartphones and television sets said the memory chip “supercycle” of tight supply and strong demand was set to continue as servers and mobile devices require ever greater processing capacity.

“For 2018, the company expects earnings to grow primarily from the component businesses, as conditions in the memory market are likely to remain favorable and the company expects increased sales of flexible OLED panels,” the South Korean tech giant said in a statement.

Samsung is on track for record full-year profit, with analysts forecasting even better fourth-quarter on strong memory chip prices and organic light-emitting diode (OLED) screen sales for Apple Inc’s (AAPL.O) iPhone X.

It also announced a shareholder return policy for the next three years, ramping up returns guidance to a level higher than its current range of 30-50 percent of free cash flow to 50 percent over three years.

Operating profit nearly tripled in the third quarter from the same period a year earlier, to 14.5 trillion won ($12.91 billion), Samsung said in a regulatory filing, matching its earlier estimate.

Revenue jumped 29.8 percent to 62 trillion won, also in line with its earlier estimate.

The chip business was Samsung’s top earner as it booked a record 10 trillion won operating profit, from 3.4 trillion won from the previous corresponding period. Client demand for more powerful devices and supply constraints pushed up prices of both DRAM and NAND memory chips, widening profit margins.

In the mobile sector, Samsung has put last year’s costly withdrawal of the fire-prone Note 7 gadget behind it and posted a jump in mobile profit to 3.3 trillion won from 100 billion won last year.

More than 4 million Galaxy Note 8 smartphones have been sold since the premium model was launched in mid-September, making up for slowing sales of the Galaxy S8 launched earlier in 2017, analysts said.

The record earnings come after Samsung Electronics CEO and Vice Chairman Kwon Oh-hyun announced on Oct. 13 that he plans to step down from management.

His departure leaves key roles vacant – head of the components business including memory chips, head of the display business, as well as chairman of the board and a board director.

Samsung Electronics shares were down 0.7 percent soon after the earnings release, while the Kospi benchmark share price index .KS11 was flat.

($1 = 1,123.4300 won)

Reporting by Joyce Lee; Editing by Stephen Coates

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