Samsung’s Q3 profits have fallen around a third from last year, thanks to the Note7 fiasco

In financial results released for the third quarter of 2016, Samsung confirmed that its profits have taken a huge hit as a result of the Galaxy Note7 recall. The company posted around US$4.7 billion in operating profit for Q3, down about US$1.93 billion from the same period last year. But gloomy as they are, the results were in line with a revised earnings guidance issued earlier in the month, where it predicted a similar drop in profit.

Still, even though we all know the reason for the decline, the drop marks the first profit decline for Samsung in a year. Operating profit for the mobile division even plunged 96 per cent from a year earlier. The company had previously experienced a straight two years of shrinking profits before it finally returned to growth in Q3 2015.

Before halting production of the Note7, Samsung had even expected small increases in operating profit this quarter.

The glaring gap left by the Note7 was partially made up for by strong performance from Samsung’s consumer electronics division, but the company cited other reasons for the decline as well, including the Korean won’s strength against other currencies.

Moving forward, Samsung said that it would spend over 27 trillion won in capital expenditures this year as it focuses on components like 3D NAND flash memory and OLED displays to drive profits. In the meantime, it’s probably just hoping that everyone just forgets about the exploding phones.

Source: The Wall Street Journal