Samsung's free-falling financial flameout
Galaxy Note 7 disaster burns billions
Samsung's global Galaxy Note 7 recall has already wiped out 96 per cent of its mobile division's profit margins, the company announced yesterday.
The division recorded a 2.4 trillion (tn) won (US$2.09bn) profit in Q3 2015, but that's plummeted to 0.1tn won (just $8.7 million) in Q3 2016.
That dragged down Samsung Electronics, with a company-wide 17 per cent profit slump, from 5.4tn won ($4.8bn) in Q3 2015 to 4.5tn won (a little under $4bn).
The consumer electronics (the screen business) and silicon businesses held up well enough to keep the company in profit overall, contributing 770bn won ($314m) and 3.4tn won ($2.9bn).
The Galaxy Note 7 recall hit the company's OLED displays, but its LCD business rose enough to offset that effect.
Samsung's mobile business will continue to suffer well into next year, when the company plans to introduce the Galaxy S8 – and even then, recovery will depend on whether consumers trust that it won't go the way of the Note 7.
Co-CEO JK Shin told the general meeting in Seoul: "We know we must work hard to earn back your trust and we are committed to doing just that."
The company noted that its investigations into the flammable batteries are ongoing, and it will only drop the axe on executives once it's assigned responsibility for the catastrophe.
The full results are here [PDF]. ®
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