Samsung shrugs off Galaxy Note 7 disaster to report big increase in profits

While the Galaxy Note 7 crashed and literally burned, semiconductors and OLED screens have been pulling in the profits for Samsung

South Korean consumer electronics giant Samsung, which was forced to withdraw a major product line last year, has announced that it expects to post its highest quarterly profit in more than three years when it unveils its financial results for the fourth quarter of 2017.

It comes despite the embarrassment of the Galaxy Note 7 fiasco, in which a battery fault caused a series of fires. Because the battery was glued-in to the devices, the entire product line had to be pulled.

The company said today that it expects to post a 9.2 trillion won (£6.2bn) operating profit for the fourth quarter of last year, the highest since the third quarter of 2013. This is a 50 per cent increase compared to the same period in 2015.

The figures surpass Samsung's initial expectations, with the company stating in previous guidance that it expected to take a "mid-three-trillion won" hit on operating profits in the fourth quarter due to the costs of the Galaxy Note 7 disaster.

Samsung hasn't said much else, but Bloomberg credits the expected rise in profits to the company's OLED display unit and booming chip business, saying "huge demand" for memory chips by China's lower-end smartphone market led to a "persistent rise" in their prices.

Operating income from the chip business probably came to 4.5tn won in Q4, according to the report, with profits from its OLED display business likely around the 1.1tn won mark.

Analysts expect Samsung's good fortune to continue, and say the firm likely will see a "record June quarter profit" thanks to the impending launch of the Galaxy S8, which is expected to arrive in April.

Samsung posted solid earnings only with sales of older smartphone models like the Galaxy S7 after the Note 7's discontinuation," Kim Sung-soo, fund manager at LS Asset Management, told Reuters.

"This makes me have hopes for the Galaxy S8. Should they fare well, I expect Samsung to report record earnings this year."