Samsung Electronics to Be the Business to Make the Most Operating Profit of Second Quarter in the World

Jun 20, 2017

Samsung Electronics is expected to be the company to make the most operating profit of second quarter in the world. Not only is Samsung Electronics’ second quarter operating profit is projected to be higher than operating profits from its competitors such as Apple and Intel but it will also be similar to operating profits from ‘FANG (Facebook, Amazon, Netflix, Google)’, which leads rise in stocks of American IT companies, put together.
According to industries on the 19th, Samsung Electronics is expected to be the company to make the most operating profit of second quarter out of all global companies.
Consensus (average of estimations made by stock firms) of Samsung Electronics’ second quarter operating profit is $11.6 billion (13.1187 trillion KRW). Because estimation of its performance is continuing to rise as second quarter is about to finish, there is a higher possibility that its final operating profit will be higher than current estimations. Actually there are many stock firms that estimate that Samsung Electronics’ second quarter operating profit will be more than $12.3 billion (14 trillion KRW).
Estimation of Samsung Electronics’ second quarter operating profit is going to surpass estimation of operating profit of Apple ($10.55 billion), which is Samsung Electronics’ competition in Smartphone markets and an immovable number one company in IT industries.
Difference in second quarter operating profit between Samsung Electronics and Intel is wider than the difference between Samsung Electronics and Intel. Intel is projected to make about $3.89 billion in operating profit for second quarter. Samsung Electronics is estimated to make more than $6.16 billion (7 trillion KRW) just from a semiconductor field which is going to be larger than what Intel is projected to make.
Samsung Electronics’ quarterly operating profit is almost similar to total of operating profits from FANG. Total of operating profits from FANG for first quarter was $11.152 billion. Because it is likely that performance of FANG is also supposed to rise during second quarter, total of its operating profits will be similar to operating profit from Samsung Electronics.
Compared to other industries, estimation of Samsung Electronics’ second quarter operating profit is unrivaled. It is expected that oil companies such as Exxon Mobil and Sinopec, which are global companies that rank at the top of the ranking based on operating profits, are not going to make more than $8.80 billion (10 trillion KRW) in operating profits during second quarter. Even though they make more in sales, difference in operating profit ratio between them and Samsung Electronics is huge. Although Wal-Mart, which is America’s biggest distributor, also makes much more sales than Samsung Electronics, its operating profit is only about $2.64 billion (3 trillion KRW).
Samsung Electronics’ performance in second quarter is hugely affected by booming in semiconductor markets and its competitive edge in differentiated technologies. It seems that more than 50% of entire operating profit will come from semiconductor business due to increase in supplies of DRAMs and NAND memories and rise in average sales price. It is about to face its company history’s biggest operating profit ever as increase in number of demands for displays and revival of its Smartphone business with Galaxy S8 at the front line are adding more positive performance to its overall performance.
“Samsung Electronics’ operating profit ratio in its semiconductor business is surpassing 40%.” said a representative for an industry. “Although increase in number of demands from markets has affected its profit ratio, the reason why its profit ratio has risen so high is because it has widened gap between itself and its competitors in technical skills.”
Samsung Electronics’ performance during second quarter also looks positive. Not only semiconductor and display markets are going to continue their positive trends during second half but consistent performance is expected throughout its entire businesses such as Smartphone and home appliance. Samsung Electronics is planning to make more than $44 billion (50 trillion KRW) in operating profit for the first time this year. It is likely that positive trends in semiconductor and display markets will continue until next year.
However there is a chance that Samsung Electronics will have to give up its top place to Apple during second half of this year when Apple releases its new iPhone. Although it is expected that they will compete for the top place during third quarter depending on the release date of new iPhone, fourth quarter is when Apple’s operating profit ratio generally goes up one more step.
Staff Reporter Kwon, Keonho | wingh1@etnews.com

■Estimation of operating profits from Samsung Electronics, Apple, and Intel in second quarter
▲Operating profit in second quarter ΔSamsung Electronics: $11.6 billion (13.1187 trillion KRW) ΔApple: $10.5 billion (11.9152 trillion KRW) ΔIntel: $3.87 billion (4.3934 trillion KRW)
Reference: FnGuide Inc., Shinhan Investment Corporation <■Estimation of operating profits from Samsung Electronics, Apple, and Intel in second quarter ▲Operating profit in second quarter ΔSamsung Electronics: $11.6 billion (13.1187 trillion KRW) ΔApple: $10.5 billion (11.9152 trillion KRW) ΔIntel: $3.87 billion (4.3934 trillion KRW) Reference: FnGuide Inc., Shinhan Investment Corporation>

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