Samsung is set to see healthy profits during its second quarter despite the pandemic decimating smartphone sales.
The South Korean tech giant surprised investors today by announcing forecasts well above analysts estimates for the April – June quarter.
Despite estimating that sales fell by 7.4 per cent to 52 trillion won (£34.8 billion), Samsung said it expected to achieve an operating profit of 8.1 trillion won (£5.4 billion) marking a 22.7 per cent year-on-year increase.
This is significantly above average analyst forecasts of 6.3 trillion won (£4.2 billion).
While these figures look overwhelmingly positive on the surface, Samsung’s share prices have dropped over three per cent since yesterday following the news.
It is understood that a key driver of these results was a one-off gains in its display business, with analysts suggested rival Apple, which uses its screens, handed Samsung as much as 1 trillion won in compensation for lower-than-promised orders.
Speaking to CNBC, Bernstein’s senior analyst and managing director Mark Newman said: “That’s really a one-time benefit that doesn’t really help the fundamental story so much,” he added.
Samsung was also aided by a boon in its chipmaking business, which makes up the majority of its profits, seeing prices jump as data centres began stockpiling to match a spike in online activity amid the global lockdown.
This helped offset stagnant smartphone sales during the second quarter, but is largely thought to have peaked and analysts believe it will slow in the third quarter.