Work from home, e-learning orders help Samsung post better-than-expected 2nd quarter

Operating profit rose almost 23% to $6.8 bn from a year ago

South Korea Earns Samsung Electronics

Samsung Electronics Co beat the most upbeat analyst estimate as the electronics giant reported a better-than-expected second quarter on Tuesday. Operating profit likely rose almost 23 per cent to 8.1 trillion Korean won (about $6.8 billion) from a year ago, beating market estimates. However, consolidated sales likely fell over 7 per cent on-year to 52 trillion won, Samsung said. 

Interestingly, this is the highest quarterly profit since the fourth quarter of 2018. Surging internet traffic due to increased companies allowing employees to work from remote locations as well as rise in online learning propelled chip demand has considerably aided Samsung. The healthy quarter was also buoyed as gadget sales started recovering from the Covid-19 slump.

The sales offset weak demand for smartphones and TVs, while one-off gains from its display business, which counts Apple Inc. as a customer, also boosted profits, the company said. While the company didn’t offer details, some analysts estimated it could have recorded a gain of as much as 1 trillion won in compensation from Apple for fewer-than-promised display orders.

​Although Samsung had warned of a profit slide in the second quarter due to plant and store closings, it managed to mitigate the fallout by cutting marketing expenses and selling TVs and monitors to people spending more time working and playing at home.

Work-from-home orders and growth in online learning is underpinning chip demand amid the COVID-19 pandemic and pushing up DRAM memory chip prices. US DRAM supplier Micron Technology Inc forecast strong quarterly revenue last month.

Analysts also said the handset and TV business may have fared better than expected due to lower marketing costs and as stores resumed operations worldwide as countries lifted lockdowns.