Samsung, Seeking to Move Past Scandals, Forecasts Record Profit

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Samsung Electronics, the South Korean technology giant, has spent nearly the past year mired in an array of crises — from its exploding smartphones to its heir apparent on trial for corruption.

It took a step on Friday to move past those scandals by forecasting record profit for its second quarter. The earnings guidance marked a welcome piece of good news for a company that has largely made headlines recently for the failure of its Galaxy Note 7 smartphone and the trial of Lee Jae-yong, the conglomerate’s de facto leader.

Profit surged to 14 trillion won, or about $12 billion, in the second quarter of this year, a 72 percent increase compared to the period a year ago, the company said in its preliminary earnings statement. Sales rose 18 percent to 60 trillion won, it said.

The growth in profit was driven by the success of the company’s semiconductor business, analysts at Bernstein Research said. The company said this week that it would invest a further $18.6 billion into its semiconductor operations in South Korea.

Earnings were also bolstered by a strong reception for Samsung’s latest Galaxy S8 phone, and by the company’s display division, which produces the organic light-emitting diodes, or OLEDs, which are used in increasing numbers of displays.

The latest earnings figures signal that Samsung may have moved past the damage to its reputation caused by the Galaxy Note 7 recall.

A flaw in the smartphone battery cells had caused them to catch fire and even explode, leading to a humiliating worldwide recall and raising concern about the strength of Samsung’s supply chain — the company owns the facilities that produce parts for its smartphones to keep tabs on production.

The issues with the Galaxy Note 7 wiped out Samsung’s third-quarter profit last year.

The company still faces questions, however, about its corporate culture as it battles a corruption scandal that has already taken down the former South Korean president, Park Geun-hye.

Now, Mr. Lee, a vice chairman of Samsung, stands accused of bribing Ms. Park for government approval of the merger of two Samsung affiliates in 2015. That merger helped Mr. Lee, who goes by the name Jay Y. Lee in the West, retain control of the wider company.

Samsung has acknowledged it made the payments, but denies that the funds were in exchange for Ms. Park’s approval.

Source: NYT

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