Samsung forecasts a hefty 52% Q4 profit hike

Korean tech giant Samsung has issued earnings guidance for the final quarter of 2021, showing a likely 52% profit jump.

Consolidated sales for the period came in at around KRW 76 trillion, while consolidated operating profit was approximately KRW 13.8 trillion.

That represents around a 52% year on year jump in profits for Q4 2021, and a 23% rise in sales. Which sounds like great numbers to finish off the year with, but apparently market expectations were even higher.

The WSJ pointed out: “Analysts polled by S&P Global Market Intelligence on average expected the company to post about KRW 15.2 trillion won in operating profit, and KRW 75 trillion in revenue.”

So profits were lower than some analysts expected, but the revenue was higher. Samsung seemed to make a note of this in the release, saying: “the estimates reflect a one-time special bonus payment made to employees.”

What’s behind the jump? The announcement from Samsung today was completely barebones, but more detail is expected later in the month.

The WSJ went on to state: “Samsung’s top-line boost reflects ongoing strength for chip makers that have enjoyed elevated demand during a long-lasting supply crunch. The company is considered a bellwether for the tech world as it is both a major electronics maker and components supplier to big tech firms including Apple and Sony.

“Samsung and many other chip makers have seen their revenues jump, as a pandemic-fuelled surge in demand for all sorts of devices requiring semiconductors has created widespread shortages and a run up in prices.”

Tech analysis Sam Reynolds told the BBC: “Samsung is well placed to profit from the record-breaking demand for PCs and electronics… The Korean won continues to depreciate, making Korea’s exports more attractive on the global market.”

GSM Arena stated that the profit jump comes from strong server chip demand during the period, and that demand from Samsung clients increased both for DRAM and NAND chips. It also claims the profit expectations ‘miss’ is down to employee bonuses, marketing costs for the mobile business and ramp-up costs for new display panels.

Cnet echoes the speculation that rising chip demand provided the firm its successes, saying: “Samsung didn’t say what affected its results, but the company likely received a boost in demand for its chips as more people, forced to work from home during the coronavirus pandemic, have been buying up electronic gear and other goods.”

It certainly seems like a logical conclusion since in the previous quarter Samsung posted its highest ever revenue and second highest profit results, which were driven by sustained high market demand for semiconductors. The firm attributed the strong growth of memory chips business to favourable pricing sustained by demand from the server market and the company’s own success in reducing costs by expanding the portion of its cutting-edge processes – but of course any boost in tech sales due to the pandemic and remote working will be just as applicable for that period.

For the exact details, we’ll have to wait for the subsequent release expected later in the month.