Samsung Electronics achieved an operating profit of 7.1 trillion won in the fourth quarter of last year, exceeding market expectations. Initially, local brokerage houses estimated Samsung Electronics' operating profit at 6.4 trillion won to 6.5 trillion won in the fourth quarter of last year.
Analysts say that the company has recovered from its slump in its semiconductor business, which accounts for nearly half of its operating profit.
Samsung Electronics posted operating profit of 7 trillion won in the fourth quarter of last year following the third quarter, raising hopes for a recovery in its earnings this year.
This is because demands for D-RAMs for servers are increasing in semiconductor businesses and demands for mobile D-RAMs are expected to soar due to expansion of 5G (generation) smartphones.
Samsung Electronics made a public announcement on Jan. 8 that it achieved 59 trillion won in sales and 7.1 trillion won in operating profit in the fourth quarter of last year. Compared with the fourth quarter of 2018, sales fell 0.46 percent and operating profit dropped 34.26 percent. Compared to the third quarter of last year, sales fell 4.84 percent and operating profit plunged 8.74 percent.
Samsung Electronics posted 229.52 trillion won in annual sales and 27.71 trillion won in operating profit last year. Compared to 2018, sales fell 5.85 percent and operating profit dropped 52.95 percent.
"This year's semiconductor operating profit is expected to increase 85 percent from last year to 25 trillion won," said an analyst of Korea Investment & Securities. "As long as demand for D-RAMs is showing clear improvement and conservative facility investments by suppliers are maintained, there will be little concern about supply and demand."
However, some say it remains to be seen how much semiconductors can make up for the sluggish display business. “It is unclear whether Samsung Electronics' operating profit will be able to shift to a smooth recovery from the first quarter of this year,” an analyst of Hi Investment & Securities said, adding that a significant deficit will occur in its displays due to sluggish OLED shipments and LCD operating losses.