Samsung mobile down 96 percent as Note 7 wipes out division's Q3 operating profit

While the Note 7 debacle continues to hit Samsung's mobile fortunes, revenue has dropped across all three divisions of Samsung Electronics.
Written by Chris Duckett, Contributor on
Samsung earnings for Q3 2016
(Image: Samsung)

Samsung Electronics has seen its third quarter operating profit tumble by 2.2 trillion won compared to the same time last year, on the back of a 15 percent revenue decline in its mobile and IT division.

Overall, the company posted 47.8 trillion won in revenue for the quarter, down 7 percent year-on-year, and 5.2 trillion won in operating profit, a decline of 30 percent. A comparison to its second quarter results makes for bleaker reading, with overall profit dropping by nearly 3 trillion won from the 8.1 trillion won posted in Q2.

Profit for Samsung's mobile division came in at 0.1 trillion won, a drop of 96 percent year-on-year from 2.4 trillion won, and down 98 percent compared to last quarter's 4.32 trillion won profit for the division.

A large drop in mobile profit had been expected following the recall of the Note 7 due to battery explosions.

Samsung had previously said the Note 7 would take off 2.6 trillion won in this quarter, followed by a 2.3 to 2.7 trillion won hit next quarter, and a 1 trillion won decline in the first quarter of next year.

The company said it expects a turnaround with the launch of new flagship devices in 2017, and the continuing rollout of Samsung Pay. Its networks business expects to continue its profitability on the back of sales in LTE equipment.

On Wednesday, Samsung announced along with KT that it had completed a demonstration of "end-to-end 5G technologies".

"During today's test, which made use of 28 GHz spectrum, KT and Samsung showcased full synchronization of wireless links, assignment of IP addresses to devices, implementation of security protocols, and internet access delivered devices via a 5G virtualised core network," the company said in a statement.

With the decline of the mobile division, the profit centre for Samsung Electronics in this quarter was the semiconductor division, which posted 4.4 trillion won in operating profit, a drop of 0.26 trillion won on this time last year. Revenue for semiconductors was up 3 percent, while its display panel business saw a 6 percent drop.

The company said the revenue growth was due to demand for mobile and server memory products, and is set to continue next quarter with its NAND products.

Samsung's consumer electronics division was the only group to see an increase in profit, from 0.36 trillion won for the third quarter last year to 0.77 trillion won this quarter, even though revenue was down 3 percent year-on-year to 11.2 trillion won. The profit jump was due to significant increases in premium large-sized televisions.

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