South Korea's Samsung Electronics announced today's fiscal third quarter report. The financial report showed that Samsung Gala's net profit fell 16.8% and the overall operating profit fell 30% due to the recall of the Galaxy Note7 smartphone.
Samsung Electronics said that third-quarter net profit fell 16.8% year-on-year to 4.54 trillion won (about 4 billion US dollars), due to the catastrophic event of high-end Galaxy Note7 smartphone, causing the quarterly profit of the mobile sector to be launched for the first time since six years ago. The lowest record since the Galaxy series of mobile phone product lines.
After the Galaxy Note7 smartphone was discontinued, Samsung’s mobile operating profit fell 96% to 100 billion won a year ago. The product went on sale on August 19 this year, but dozens of reports of overheating forced the company to implement a product recall for the first time on September 2, and finally abandoned it on October 11.
The overall operating profit for the three months ended September 30 decreased by 30% to 5.2 trillion won, and revenue fell by 7.5% to 47.82 trillion won, compared with nearly 7.4 trillion won a year ago.
The company said earlier this month that it expects to lose another 3.5 trillion won in the last three months of 2016 and the first three months of next year due to the loss of Galaxy Note7.
If it is not because the sales of semiconductors and display panels are relatively stable, Samsung's profit loss will be even worse. The semiconductor division earned 3.37 trillion won, down 7.9% year-on-year, while the display panel's profit was 1.2 trillion won, up 9.7% year-on-year.
As a result, semiconductors and display panels accounted for 84% of Samsung's overall operating profit, the highest level in years.
Samsung Galaxy Note7 is on the verge of defeat, its rival enemy Apple is also trying to maintain the demand for the iPhone. Last Tuesday, the smartphone maker based in Cupertino, Calif., announced that revenues have fallen for the first time in 15 years, and the holiday season sales prospects have also disappointed investors.
When Samsung first launched the Galaxy Note7 smartphone, it received positive comments, and consumers' pre-purchase desires were strong. Analysts increased their profit forecast for the company. One day before Note7 went public, Samsung's share price jumped to its highest level in three years.
However, reports of self-ignition of mobile phones led Samsung to announce the recall of 2.5 million devices worldwide. Before being forced to recall these phones, the company launched millions of allegedly safe alternative smartphones. Samsung said it has not identified the root cause of the problem and made the public more worried about whether the company will repeat the same mistakes. Samsung is expected to launch its next flagship smartphone, the Galaxy S8, in February next year.
Due to the operational difficulties caused by Galaxy Note7, Samsung's mobile operating profit margin has risen to over 16% in the previous quarter, but now it has suddenly dropped to almost zero.
In order to reverse this unfavorable situation, Samsung said on Thursday that this year's capital expenditure will increase by 27 trillion won, and the investment in three-dimensional NAND flash memory and organic light-emitting diode (or OLED) components will double to drive profit growth. .
In addition, Samsung shareholders will vote for Samsung’s heir, Li Zaijun, on Thursday morning. If successful, this will be his first formal entry into the board of directors.
The company's cash reserves also continued to grow, reaching a record 83 trillion won at the end of September.
In the Seoul stock market, Samsung shares rose slightly by 0.5% in early trading today.
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