Samsung tips huge jump in profit despite corruption scandal

AP News
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Posted: Apr 06, 2017 11:02 PM
Samsung tips huge jump in profit despite corruption scandal

SEOUL, South Korea (AP) — Samsung Electronics said Friday its first-quarter profit jumped 48 percent, a better-than-expected result that analysts believed to be driven by strong smartphone components.

The quarterly earnings preview show that how Samsung's business is booming while its stock trade near historic highs, despite unprecedented crises in recent months. Samsung scrapped its flagship smartphones last year after they overheated and caught fire, leaving billions of dollars in financial damages and hurting its reputation. A few months later, its de facto heir and several top executives were charged with crimes linked to a political scandal that toppled the country's president.

Its January-March operating income will be 9.9 trillion won ($8.8 billion), compared with 6.7 trillion won a year earlier, the South Korean company said in its earnings preview.

The result was higher than the market consensus of 9.3 trillion won, according to financial data provider FactSet. Its sales stayed nearly flat at 50 trillion won ($44 billion) during the first quarter.

Samsung's de facto leader is due to make his first appearance at court later Friday along with four other Samsung executives who were also charged on bribery and embezzlement.

Lee Jae-yong, 48, a vice chairman at Samsung Electronics and the only son of its chairman, was arrested and indicted in February on bribery, embezzlement and three other charges that could entail at least five years in prison if he is proven guilty.

Prosecutors believe the 48-year-old billionaire and his aides used Samsung corporate funds to bribe former President Park Geun-hye and her close confidante in exchange for supporting a smooth leadership transition at Samsung. Samsung gave or promised to give 43.3 billion won ($38 million) to four entities controlled by Park's friend Choi Soon-sil, who has been charged with misuse of power and meddling in state affairs. Prosecutors allege the money was given to obtain government backing for a contentious merger of two Samsung companies in 2015 that served as a key step in passing corporate control to Lee from his ailing father.

The scandal engulfed Park's administration, prompted millions of South Koreans to regularly protest in the streets and culminated in Park's ousting in March.

Lee's lawyers have previously denied all charges brought against Lee.

Samsung did not elaborate on its quarterly results. It is scheduled to give more details including quarterly net profit later in the month.

Analysts said strong demand for mobile chips and displays for smartphones fueled the stellar profit during the typically slow season for smartphones and television sets. They said Samsung's semiconductor division likely recorded profit much higher than expected, contributing more than half of the company's quarterly income as supplies of memory chips remained tight while demand from global smartphone makers was solid.

Samsung, the world's largest maker of smartphones and display panels, has unveiled the Galaxy S8 smartphone last week, which is set to go on sales later this month. The S8 was its first major smartphone launch since the fire-prone Galaxy Note 7 fiasco.