SEOUL -- Samsung Electronics reported a double-digit increase in operating profit during the third quarter from a year ago, boosted by demand for semiconductors, foldable smartphones and the effects of a weak local currency against the U.S. dollar.
The South Korean tech giant said Friday in releasing earnings guidance for the three months ended Sept. 30 that its operating profit jumped 27.9% to 15.8 trillion won ($13.3 billion) from the same period last year.
The figure is in line with market expectation of an increase of 28.2% to 15.83 trillion won in FnGuide's latest consensus based on data from 22 brokerage houses. Samsung's revenue increased 9 % to 73.0 trillion won during the same period, slightly below the consensus view of a 10.4% increase to 73.9 trillion won.
The company is expected to release full results, including net profit, later this month.
Rising prices for both memory and foundry chips combined with strong sales for its Galaxy Z foldable smartphones launched in August boosted performance during the quarter, according to analysts. A weakening South Korean currency likely added about 1 trillion won to the company's bottom line, they said.
A cheaper won can make Samsung's products less expensive in overseas markets and increases the value of profits earned overseas when converted into the South Korean currency.
Hanwha Securities expects Samsung's semiconductor performance to best rivals for the second half of this year, led by improvement in foundry chips, which are made-to-order semiconductors. The brokerage said before the results came out that Samsung's orders won in the third quarter likely boosted its operating profit margin to more than 10%.
Samsung in August announced a plan to invest 244 trillion won and hire 40,000 employees over the next three years, focusing on system chips and the foundry business. The large-scale investment was a clear response to the government of South Korean President Moon Jae-in, which expects Samsung and Vice Chairman Lee Jae-yong to contribute to the performance of the national economy.
Lee, who is following in the footsteps of his late father and grandfather in helming Samsung, got out of prison on parole just two weeks before the investment and hiring plan was announced. He had served more than half of a 30-month prison term for corruption and his release was both welcomed and criticized in a country where convicted business titans often receive leniency.
Despite Samsung's success with foldable phones, Lee will have to deal with increasing competitive pressures in smartphones. CEO Lei Jun of Chinese smartphone maker Xiaomi laid out a direct challenge in August, saying it aims to surpass its South Korean rival as the world's top seller in three years.
Despite strong results this year, Samsung's stock price is underperforming as investors fret that a cyclical downtrend in memory chips could be just around the corner and possibly weigh on the company's value.
But investors in early Friday trading pushed Samsung shares up 0.98% to 72,300 won after the guidance came out just ahead of the start of trading.