Samsung posted third-quarter net income of $4.6 billion (5.3 trillion Korean won) – it’s first earnings growth in over a year – on Thursday but warned investors the windfall was unlikely to continue through the end of the year.
Samsung’s positive third-quarter results were driven primarily by the massive success of its chip business, which raked in $3.2 billion (3.66 trillion won) of the company’s $6.5 billion (7.4 trillion won) operating profits.
Samsung’s panel display unit had a banner quarter, jumping from $52 million (60 billion won) in the third quarter 2014 to $812.5 million (930 billion won) this year. The dramatic increase was attributed to a rise in sales of its organic light-emitting diode (OLED) displays that are used in the company’s Galaxy smartphones.
Though it, too, posted a year over year gain of 36 percent, Samsung’s mobile division struggled in a quarter-over-quarter comparison, dropping from operating profits of $2.4 billion (2.76 trillion won) in the second quarter to just under $2.1 billion (2.4 trillion) in the third. Samsung attributed part of the drop to the impact of price cuts on the Galaxy S6 and S6 Edge, as well as an increase of sales in the company’s mid- to low-end product range.
Despite the decline, Samsung reported “strong shipment growth” thanks to the launch of new models like the S6 Edge+, Note5, A8 and J5. According to the IDC, Samsung shipped 84.5 million smartphones during the third quarter, compared to just 8 million tablets in the same quarter. Samsung said it is aiming to expand sales of its new phone models and expects to see a seasonal increase in tablet shipments in the fourth quarter.
The third-quarter results were given an additional boost by favorable exchange rates driven by a strong dollar, a factor that was not expected to carry over into the fourth quarter.
“We expect earnings to decline compared to previous quarter, as we do not expect the positive foreign exchange impact to continue,” Samsung’s senior vice president of investor relations Robert Yi said.
Buoyed by the quarterly growth, however, Samsung announced a $9.9 billion (11.3 trillion) share buyback that will be conducted over the next year to sate investor demands for more dividends. The company has promised to return between 30 and 50 percent of its annual free cash flow to shareholders over the next three years.
On Wednesday, Samsung announced its Samsung Pay service has gained a strong repeat user foothold in the U.S. market just one month after its launch. The company said it plans to expand the service to both include more financial institutions and make a gift card payment option available to users. The service is currently only available on the Galaxy Note 5, S6, S6 edge and S6 Edge+.
Samsung followed up on Thursday with the launch of its new Galaxy View tablet, which will hit stores on Nov. 6. Priced at just under $600, the 18.4-inch device will run Android Lollipop on a 1.6 GHz Octa-core processor and feature a 2.1 mp front facing camera, a 5,700 mAh battery, and 32 GB of internal memory with expandable storage up to 128 GB.