Samsung profits up 50%, marking rapid recovery from Galaxy Note 7 battery fires

Company was engulfed in a scandal in October when its flagship smartphones began bursting into flames

The world's biggest smartphone maker says it has enough cash to deal with the Note 7 problems (Reuters)

Samsung said its profits would soar by 50 per cent in the fourth quarter, marking a rapid recovery from the Galaxy Note 7 debacle.

The earnings are the company’s highest since 2013 and exceed analysts estimates. The company was engulfed in a scandal in October when its flagship smartphone devices began bursting into flames. The handsets were banned from aircraft and the disaster was compounded after hastily-issued replacement models also began igniting.

The firm was forced to scrap the Note 7 altogether at a cost of billions, though Samsung said it had enough cash to absorb the losses.

The company said 9.2 trillion won (£6.2bn) in operating profit in the three months from October to December, up from 6.1 trillion won a year earlier.

The South Korean won’s recent depreciation may have helped boost profits as component sales are typically settled in US dollars. The currency fell 8.8 per cent against the dollar in the fourth quarter.

Samsung forecasts a 10 per cent rise in its annual income but expects sales to fall 1 per cent in the fourth quarter to 53 trillion won.

Analysts predict strong growth in Samsung’s chip business, which sells components to other smartphone makers including Apple. The division is expected to earn a record 4 trillion won in operating profit in October-December.

Its embattled smartphone division is expected to rebound from quarter three.

“Samsung posted solid earnings only with sales of older smartphone models like the S7 after the Note 7’s discontinuation,” said said Kim Sung-soo, a fund manager at LS Asset Management.

“This makes me have hopes for the Galaxy S8. Should they fare well, I expect Samsung to report record earnings this year.”