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Samsung’s Note 7 recall: Revenues decline by $2.84 billion YoY


Samsung, which has been suffering from the Note 7 recall fiasco, reported total revenues of $41.74 billion (47.8 trillion Won), a 7.5% decline from $38.9 billion (44.54 trillion Won) in the same quarter last year. The decline was mainly due to the Note 7 problem, with its mobile division reporting sales of $19.3 billion (22.1 trillion Won), down by 15% year-on-year from $22.6 billion (25.9 trillion Won) and 15% quarter-on-quarter from $22.8 billion (26.1 trillion Won).

Note that in its concall Samsung did not address much on the Note 7 issue. Instead it said that, “Shin Jong-Kyun, President of IM division, is going to make a special report during the extraordinary shareholders meeting. He wants to share the steps that we’re taking to investigate the cause of the Note 7 issue. He will also conduct Q&A sessions within that EGM to address shareholders’ concerns. Because of this, we’ll not cover any Note 7 issues, except the financial aspects.”

As for the financials, the company expects loss due to the discontinuation of Note 7 to be in the range of mid 2 trillion Won ($1.75 billion) in the fourth quarter and an additional mid 1 trillion Won ($0.9 billion) next first quarter. A representative said that “around mid 2 trillion Won range of opportunity loss that we announced to the market that we expect in the fourth quarter, most of that is IM directly related, perhaps around close to 500 billion Won is related with the component business.” The component business refers to the money Samsung’s OLED business etc., will lose due to stopping production.

Other than this, the company’s SG&A (Selling, General and Administrative Expenses) expenditures also increased year-on-year due to the recall cost related to the phone. Overall, the operating profit decreased by $1.92 billion (2.2 trillion Won), year on year to $4.54 billion (5.2 trillion Won), and it looks like the company will stand to lose ~$4.5 billion in total due to the recall (profit difference YoY + estimated losses of upcoming quarters).

Samsung mentions that it will mitigate some of the losses by offering Galaxy S7’s in lieu of the Note 7. As for the impact of this recall on other smartphones the company said that “we don’t see any impact of the Note 7 discontinuation on our other product demands. The S7 sales trends remained strong in the third quarter. And on a full year basis it will greatly surpass the sales of its previous model. Also the sales on our mid to low-end models are also strong”

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Other businesses:

– Samsung reported $xx billion (4.4 trillion Won) in profits from its Device Solutions division, which consists of the Semiconductor & Display Panel businesses.

– The Consumer Electronics division, encompassing the Visual Display, Digital Appliances, Printing Solutions and Health & Medical Equipment businesses, reported profits of $xx billion (0.77 trillion Won), up xx% from $xx billion (0.36 trillion Won) in the same quarter last year. The division reported revenues of $xx billion (11.24 trillion Won), down from $xx billion (11.59 trillion Won) in the previous quarter. The Visual Display business accounted for $xx billion (6.6 trillion Won) of the sales.

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© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ