The South Korean conglomerate said on Tuesday that it expects to generate an operating profit of around 8.1 trillion won ($ 6.8 billion) for the three months ended in June. That’s up nearly 23% from the same period last year. The estimate also beat about 2% of the profit decline predicted by analysts by data provider Refinitiv.
Samsung said it expects sales to drop around 7% to 52 trillion won ($ 43.6 billion). Analysts surveyed by Refinitiv estimated sales of 51.4 trillion ($ 43 billion).
Samsung shares opened 1.5% in Seoul, before cutting back the increase. The last stock traded down about 1.5%.
Samsung said the estimate “includes the one-time profit associated with the display business.” This does not explain revenue, but will report complete results for the second quarter at the end of this month.
Samsung – which supplies important parts like display panels and chips to companies like
Apple (AAPL) and Huawei – one of the first major technology companies to report earnings for the quarter, and the full report will be seen as a weather bell for how the technology giant faced a pandemic.
The company has enjoyed a boost for the memory chip business thanks to Covid-19. Millions of people around the world continue to work, play games and watch movies from home, which leads to strong demand for chips from data centers, according to analysts.
But sales at Samsung’s consumer electronics unit took a hit.
Smartphone sales in the second quarter are likely to “drop to 55 million units,” Daiwa analyst SK Kim wrote in a note last month. That would be a decrease of more than 27% from the same period a year earlier,
according to data from the market research company IDC.
But analysts say the consumer electronics division, which includes sales of smart phones and TVs, is still profitable because of work restrictions and sustainable travel.
Kim, along with Lee Subin, an analyst with Daishin Securities, said that despite disappointing sales, Samsung’s smartphone unit is likely to enjoy wider profit margins because closing retail stores means lower marketing costs.
Kim added that “reducing … internal costs such as business travel due to Covid-19” also helped the bottom line of the smartphone division.
