Samsung Electronics flagged its biggest operating profit in more than two years, boosted by cost-cutting and solid sales of its latest flagship smartphone.
The South Korean electronics company – also the world’s top handset maker – predicted an operating profit of 8.1 trillion won (Dh25.8 billion) in the April to June quarter, up 17 per cent from a year ago.
It is the company’s biggest operating profit since the first quarter of 2014 and beat the average analyst estimate of 7.4tn won.
Analysts attributed the figures to the firm’s aggressive cost-cutting and brisk sales of the Galaxy S7, the latest version of its high-end smartphone.
“Samsung’s mobile unit is believed to have performed well thanks to robust sales of Galaxy S7s as well as an overhaul of its low- and mid-end handset line-up,” said Peter Lee, an analyst at NH Investment & Securities.
He estimated that the firm had sold about 26 million units of the S7 since it hit stores in March ahead of new launches by competitors, including Apple.
Samsung has bolstered its mid- to low-end smartphone line-ups to expand in fast-growing emerging markets.
The mobile business accounts for the lion’s share of the company’s overall profit, which has been increasingly squeezed by competition both from Apple’s iPhone and by lower-end devices from Chinese rivals such as Huawei.
Past editions of its flagship smartphones – Galaxy S5 and S6 launched in 2014 and 2015, respectively – had largely met with tepid response, prompting concerns over the firm’s overgrown mobile business.
Samsung shares jumped 2 per cent to close at 1.45 million won in Seoul.
The firm’s aggressive cost-cutting in marketing played a key role in the strong profit forecast, Greg Roh of HMC Investment said, but he warned of more competition from Apple later this year.
“With Apple releasing new products in the latter half of the year ... I think [Samsung’s] earnings may drop in the second-half,” he said.
But the firm’s semiconductor business, which produces memory chips for Samsung gadgets and other clients including Apple, is likely to help offset a slump in the mobile business, Mr Greg said.
The semiconductor unit has buttressed Samsung’s profit margins, with its operating profit largely outpacing the mobile business since late 2014. It racked up operating profit of 12.8tn won last year, beating the 10.1tn won earned by the mobile unit.
The world’s No 2 chipmaker has dominated production of faster, larger-capacity chips using a technology called 3D Nand.
Samsung was the first to mass produce chips using the technology and is producing the high-margin chips – used in mobile gadgets and hard drives for servers – at its factories at home and in China.
“Competitors are trying to increase their 3D Nand production capacity ... but Samsung is expected to lead the market for a while given the technological gap,” said Kwong Sung-ryul, an analyst at Dongbu Investment and Securities.
The forecast, which comes ahead of audited results to be released this month, did not provide a net income figure or breakdown of divisional earnings for the company’s mobile, TV, semiconductor and display units.
It predicted second-quarter sales of 50tn won, up from 48.5tn won a year ago.
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A Cat, A Man, and Two Women
Junichiro Tamizaki
Translated by Paul McCarthy
Daunt Books
UAE players with central contracts
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'Panga'
Directed by Ashwiny Iyer Tiwari
Starring Kangana Ranaut, Richa Chadha, Jassie Gill, Yagya Bhasin, Neena Gupta
Rating: 3.5/5
The biog
DOB: 25/12/92
Marital status: Single
Education: Post-graduate diploma in UAE Diplomacy and External Affairs at the Emirates Diplomatic Academy in Abu Dhabi
Hobbies: I love fencing, I used to fence at the MK Fencing Academy but I want to start again. I also love reading and writing
Lifelong goal: My dream is to be a state minister
BEETLEJUICE BEETLEJUICE
Starring: Winona Ryder, Michael Keaton, Jenny Ortega
Director: Tim Burton
Rating: 3/5
Company%20profile
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Mohammed bin Zayed Majlis
The Melbourne Mercer Global Pension Index
The Melbourne Mercer Global Pension Index
Mazen Abukhater, principal and actuary at global consultancy Mercer, Middle East, says the company’s Melbourne Mercer Global Pension Index - which benchmarks 34 pension schemes across the globe to assess their adequacy, sustainability and integrity - included Saudi Arabia for the first time this year to offer a glimpse into the region.
The index highlighted fundamental issues for all 34 countries, such as a rapid ageing population and a low growth / low interest environment putting pressure on expected returns. It also highlighted the increasing popularity around the world of defined contribution schemes.
“Average life expectancy has been increasing by about three years every 10 years. Someone born in 1947 is expected to live until 85 whereas someone born in 2007 is expected to live to 103,” Mr Abukhater told the Mena Pensions Conference.
“Are our systems equipped to handle these kind of life expectancies in the future? If so many people retire at 60, they are going to be in retirement for 43 years – so we need to adapt our retirement age to our changing life expectancy.”
Saudi Arabia came in the middle of Mercer’s ranking with a score of 58.9. The report said the country's index could be raised by improving the minimum level of support for the poorest aged individuals and increasing the labour force participation rate at older ages as life expectancies rise.
Mr Abukhater said the challenges of an ageing population, increased life expectancy and some individuals relying solely on their government for financial support in their retirement years will put the system under strain.
“To relieve that pressure, governments need to consider whether it is time to switch to a defined contribution scheme so that individuals can supplement their own future with the help of government support,” he said.
COMPANY%20PROFILE
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BELGIUM%20SQUAD
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The%20Specs
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The%20Roundup
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What is graphene?
Graphene is extracted from graphite and is made up of pure carbon.
It is 200 times more resistant than steel and five times lighter than aluminum.
It conducts electricity better than any other material at room temperature.
It is thought that graphene could boost the useful life of batteries by 10 per cent.
Graphene can also detect cancer cells in the early stages of the disease.
The material was first discovered when Andre Geim and Konstantin Novoselov were 'playing' with graphite at the University of Manchester in 2004.