SEOUL – Samsung Electronics Co. delivered its biggest-ever quarter of profits, shrugging off a year of tumult by leaning on its dominance as a supplier of electronics components that even its rivals can't do without.
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Samsung said net profit jumped to 11.05 trillion South Korean won ($9.9 billion) for the three months ended June 30, an 89% rise from 5.85 trillion won for the same period a year earlier. Revenue shot up to 61 trillion won from April to June, rising from the prior year's second quarter of 50.94 trillion won.
The South Korean technology giant blew past its previous record quarterly net profit of 8.24 trillion won, which came nearly four years ago as booming smartphone sales drove growth. In a shift from those days, components such as semiconductors and display panels, sold to competitors such as Apple Inc. or Sony Corp., account for about 70% of the firm's bottom line.
Samsung's profits were also boosted by strong sales of the Galaxy S8, its first premium smartphone since last year's global recall of the Galaxy Note 7. Samsung said the Galaxy S8 and the larger S8+, which won strong reviews for their sleek design, have outsold its predecessor, the Galaxy S7, in almost all regions.
Operating profits also rose 73% to 14.07 trillion, an all-time high, over the 8.14 trillion reported in the same period last year.
Samsung last topped Apple's quarterly results in 2010. Apple has a projected net income of $8.2 billion for the three-month period, according to analysts polled by S&P Global Market Intelligence, in what is traditionally a weaker quarter for the world's most-valuable company. Apple, set to launch its 10th-anniversary iPhone, is still projected to notch up larger full-year profits than Samsung.
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Samsung Electronics shares are trading near all-time highs and have risen more than 60% over the past year. On Thursday, Samsung said it would continue a 9.3 trillion share buyback program this year, repurchasing 670,000 common shares and 168,000 preferred shares over the next three months. Samsung has so far repurchased about 5 trillion won worth of shares.
Less than a year ago, Samsung's potential ascension to the world's most-profitable technology company, even for a singular quarter, would have seemed bold. Last fall, its Galaxy Note 7 devices overheated, and some caught fire, handing Samsung a crisis that ended with an embarrassing global recall that cost the company more than $5 billion. Then in February, Samsung's de facto leader, Lee Jae-yong, was put behind bars, accused of having a role in the country's corruption scandal. Mr. Lee denies wrongdoing and is standing trial.
Even without its leader, its chic brand tarnished, the Suwon, South Korea-based firm saw its profits balloon due to voracious demand for its memory chips and flexible displays, mundane products that few consumers even realize are Samsung-made.
More than a decade ago, Samsung began plowing billions of dollars into 3-D NAND semiconductors that can store more content in a small chip, allowing gadgets extra memory capacity. The company also moved aggressively into flexible OLED displays, short for organic light-emitting diodes, which enable phone makers to create sleeker, thinner devices.
Despite the record quarter, the question hanging over the company's head is the fate of Mr. Lee, Samsung Electronics vice chairman and grandson of the company's founder. Mr. Lee isn't known as a micromanager, but in South Korea's family-run chaebol system, his signoff is required for overall strategy moves and important decisions.
The Harvard-educated Mr. Lee has tried to modernize the company's opaque and hard-driving culture since his father, Samsung's chairman, became incapacitated with a heart attack in 2014. He has also pushed the Samsung conglomerate, which spans dozens of enterprises as varied as theme parks and lithium-ion batteries, to slim down and pivot to new areas such as biotechnology.
Per South Korean law, Mr. Lee, 49 years old, can be detained until late August. A verdict is expected from a lower court next month, and Mr. Lee is expected to testify next week in court.
Write to Timothy W. Martin at email@example.com and Eun-Young Jeong at Eun-Young.Jeong@wsj.com
Corrections & Amplifcations
Story corrected at 11:01 p.m. Original incorrectly stated that Samsung's results position the company to top Apple in quarterly profits for the first time in the sixth paragraph.
Samsung last topped Apple's quarterly results in 2010. "Samsung Profit Drops to Record High for Quarter at 8:32 p.m. ET, incorrectly stated that Samsung's results position the company to top Apple in quarterly profits for the first time in the fifth paragraph. (July 26)
(END) Dow Jones Newswires
July 26, 2017 23:13 ET (03:13 GMT)