Samsung’s Galaxy Note 7 recall hit quarterly profits hard, but the company predicts a turnaround in 2017

Image: Reuters/Kim Hong-ji
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Samsung Electronics’ Galaxy Note 7 recall hit the company’s third-quarter results hard, shaving 30% off its operating profit from a year ago to $4.6 billion, and 16.8% off its net profit, which came in at $4 billion.

Operating profit in the mobile phone division dropped 96% to just $87.5 million.

The earnings drop was previously forecast by Samsung, so there was little impact on the company’s stock price, and it closed up slightly in trading in Seoul today (Oct. 27). Despite the turmoil and bad publicity caused by the botched recall, not to mention the $2.3 billion in lost profits, Samsung predicted its fourth-quarter results would improve from a year ago, thanks in part to strong component sales, and even an improvement in its mobile phone division. It also forecast a bright future for 2017, especially in mobile, where it “anticipates a turnaround with the launch of new flagship smartphones.”

Samsung has said that the total cost of the recall could be at least $5.3 billion.

Even as the recall was getting underway earlier this month, Samsung’s stock price hit record highs, thanks to the company’s increasing reliance on semiconductor and display sales.