Samsung has managed to register huge jump in profits despite writing off billions of dollars as a result of the Galaxy Note 7 fiasco, the company has revealed in a press note.
According to the South Korean electronics giant, the company’s profit for the last quarter of 2016 saw an increase of about 50 per cent to the highest level in more than three years – a figure that many analysts didn’t even think about because of the huge Galaxy Note 7 fiasco that not only tarnished the company’s name and reputation but put a huge dent in its pockets.
Analysts did say that there will be profits for the company because of company’s burgeoning semiconductor business, but such a massive jump in profits wasn’t expected. The major positive for Samsung’s semiconductor division was the strong demand and a tight supply for microchips during the September-December period.
Samsung posted a 9.2 trillion won ($7.8 billion) operating profit, which is up from 6.1 trillion won a year earlier. It was the biggest quarterly income since the third quarter of 2013. Analysts polled by FactSet expected a figure of 8 trillion won. Sales fell 1 percent to 53 trillion won ($44.9 billion). The company did not give net profit or breakdown figures for its businesses, which are due later this month. If we look at the full year, Samsung saw a 10 per cent gain in its annual income and this result is its best in three years.
The result is a bright spot for the tech giant that was obliged to do multiple recalls last year of products that included a popular smartphone and a washing machine.
The company faces an investigation linking it to an influence-peddling scandal that led to the impeachment of President Park Geun-hye. Samsung already has postponed its annual personnel reshuffle, usually announced in December, due to the scandal.
Further the Samsung Group faces allegations that Samsung Electronics and its affiliated companies paid money to foundations and a company controlled by a long-time friend of Park’s, Choi Soon-sil, in order to get the government’s backing in a controversial merger of two Samsung affiliates related to Samsung’s father-to-son leadership succession.
It is still unclear why the Galaxy Note 7 smartphones were prone to overheating and catching fire. That prompted two recalls and eventual discontinuation of the flagship product.