Samsung reports solid earnings in Q2 on strong chip business


Business | Written by : IANS| Updated:


Samsung reports solid earnings in Q2 on strong chip business

Seoul, July 30 (IANS) Samsung on Thursday reported strong second quarter earnings on the back of robust demand for memory chips and appliances, as well as a one-off gain at its display panel business.

Its net profit stood at 5.55 trillion won ($4.7 billion) in the April-June period, up 7.23 per cent from a year earlier, Samsung said in a regulatory filing.

Samsung's operating profit jumped 23.5 per cent on-year to 8.15 trillion won in the second quarter of the year, but sales fell 5.6 per cent on-year to 52.97 trillion won over the cited period.

Samsung's operating margin for the second quarter stood at 15.4 per cent, up from 11.6 per cent a year ago.

Compared to the first quarter, its operating profit soared 26.3 per cent, while net profit rose 13.7 per cent. Sales declined 4.3 per cent

The figures were in line with the earnings guidance announced earlier this month that beat the market consensus.

Samsung said its upbeat performance was anchored by its device solutions (DS) division as demand for server chips from data centres remained solid with the pandemic-driven, stay-at-home trend.

The second-quarter bottom line was also helped by one-time gains from its display panel (DP) business. Samsung did not disclose the exact amount of one-off profit, but industry insiders speculate it received more than $900 million from Apple Inc., which apparently failed to buy contracted volumes of Samsung Display Co.'s mobile display panels.

Revenue from the semiconductor unit stood at 18.23 trillion won in the second quarter of the year, a 13.3 per cent increase from a year earlier.

Its operating profit from the chip business nearly doubled to 5.43 trillion won from 3.4 trillion won a year ago.

"The memory business saw robust demand for cloud applications related to remote working and online education as the impact from COVID-19 continued, while demand for mobile was relatively weak," Samsung said.

Samsung said earnings for its system LSI business fell due to a drop in demand for mobile components. However, its foundry business achieved a record quarterly and half-yearly revenue as its customers' inventory buildups increased, reports Yonhap news agency.

Samsung's display business returned to the black, thanks to one-time gains. It logged 6.72 trillion won in sales and an operating profit of 300 billion won.

Its display business suffered an operating loss of 290 billion won in the first quarter.

Samsung's IT & Mobile Communications (IM) division suffered a sales decline, but its performance was better than expected.

The mobile business unit posted 20.75 trillion won in sales in the second quarter, down 19.7 per cent from a year earlier, but the unit's operating profit surged 25 per cent on-year to 1.95 trillion won.

"Efficient cost management, including reductions of marketing expenses and offline promotions, helped deliver solid profits," the company said.

Samsung's home appliance division, comprised of visual display and digital appliance businesses, chalked up sales of 10.17 trillion won, down 8.1 per cent from a year earlier, but operating profit climbed 2.8 percent on-year to 730 billion won.

"Profit for the visual display business rose despite softness in sales as the company sought new sales opportunities online to overcome difficulties sparked by global lockdowns," the company said.

"Seasonal demand for air conditioners on top of cost-effective marketing strategies also helped earnings."

In the second quarter, Samsung said its capital expenditures reached 9.8 trillion won, which includes 8.6 trillion won spent on semiconductors and 0.8 trillion won on displays. Its total capital expenditure in the first half was tallied at 17.1 trillion won.