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Samsung 4Q earnings more than double thanks to record chip profits

Samsung Electronics has said its fourth quarter earnings more than doubled from a year earlier, thanks to record-high earnings from its brisk memory chip business and strong smartphone sales.

The South Korean company said it posted 7.1 trillion won (£4.9 billion) during the October-December period, compared with 3.2 trillion won a year earlier.

Analysts surveyed by FactSet, a financial data provider, expected 6.52 trillion won.

Sales stayed flat at 53.3 trillion won (£36.5bn) and operating profit surged 50% over a year earlier to 9.2 trillion won (£6.3bn), in line with Samsung's guidance earlier this month.

The company, the world's largest maker of smartphones, television sets and memory chips, said its earnings during the current quarter was likely to decline because of weaker TV sales and higher marketing expenses for the mobile business.

Samsung's earnings beat forecast even as it reels from a political scandal and the scrapping of its fire-prone Galaxy Note 7, which has cost at least £4 billion since the third quarter.

On Monday, it blamed battery designs and manufacturing errors at suppliers for causing the phone to overheat.

After disclosing the earnings, Samsung said it would will buy back shares worth £6.4 billion in a way to increase shareholder values.

Giving a preview of its mobile business plan for the year, it said its smartphones would feature artificial intelligence services that allow users to talk to the phone to make commands, as users of the iPhone can do with Siri.

It also said it would introduce a "differentiated design" - possibly hinting at a new, long-awaited folding phone.

So far, Samsung's operations appear not to have suffered significant damage from the entanglement of its de facto head and heir apparent Lee Jae-yong, in an influence-peddling scandal that led to the impeachment of South Korean president Park Geun-hye.

Mr Lee, a Samsung vice chairman, got a break when a court rejected a request by prosecutors for an arrest warrant for bribery and other charges last week.

It marks a setback, but not the end to the investigation into Samsung's donations to non-profit foundations controlled by Choi Soon-sil, a confidante of Ms Park, who is on trial for meddling in state affairs.

Asked whether the investigation could have an impact on its business, a Samsung executive said it could pose challenges to the company's strategies that needed long-term planning.

"We have to be mindful of uncertainties in domestic and global political and business environments which could bring challenges in executing our mid- to long-term business strategies," Robert Yi, a senior vice president, told investors.

AP

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