The OEM’s results saw falls in revenue and operating profit.
Samsung had previously estimated that a “negative impact” from ceasing production and sales of the Note 7 smartphone could cost it “approximately” W3 trillion ($2.6 billion/€2.4 billion) in operating profit from the fourth quarter of 2016 through to the first quarter of 2017. It had “already allocated the expected direct cost” in revised results for the third quarter, and also added predictions of the effects thereafter.
Now, it has revealed its official third quarter results, having expected a “drop in revenue from the discontinued sales to continue to have a negative impact on operating profit for the next two quarters”, adding that this would manifest as around W2 trillion ($1.7 billion/€1.6 billion) in the fourth quarter and around W1 trillion ($884.2 million/€802.2 million) in the first quarter.
The “revised pre-earnings guidance” had reflected the “impact” of the Note 7 on the third quarter earnings, having only recently revealed predictions for third quarter results would see a profit “jump”. Operating profit for July to September had been expected to be W7.8 trillion ($6.9 billion/€6.2 billion), but was revised to an expected W5.2 trillion ($4.5 billion/€4.1 billion), with Samsung having predicted the Note 7 issues “could have undercut mobile earnings by at least” W1 trillion.
In reality, operating profit for the quarter was exactly as the OEM had predicted – W5.2 trillion – a decline on last year’s result of around W2.19 trillion ($1.91 billion/€1.75 billion). Revenue for the quarter meanwhile was originally expected to fall 5.2 percent to W49 trillion ($43 billion/€39 billion), less than analysts’ expectations of W51.1 trillion ($45.8 billion/€41.1 billion), and the revised figures took this down further to W47 trillion ($41.3 billion/€37.5 billion).
The official figures for revenue were again accurate to the latter prediction, at W47.82 trillion ($41.8 billion/€38.3 billion) a fall from last year of W3.87 trillion ($3.38 billion/€3.1 billion). Samsung’s perspective was that the “stronger Korean won against major currencies” had “negatively impacted operating profit” by around W700 billion ($612 million/€560 million), and for the fourth quarter, it expects an improvement year-over-year “driven by strong performance in the components business”, while the mobile business is expected to recover as well.
As The Recycler pointed out previously, Samsung has continued to omit any reference of the potential impact of Samsung’s deal with HP Inc, where the latter acquired Samsung’s printing business for $1.05 billion (€932.8 million). The Recycler had previously reported Samsung was mulling over a $1.8 billion (€1.6 billion) sale to HP Inc, after the Seoul Economic Daily outlined Samsung was “considering selling its printer business” as it “shifts focus to its core businesses”.