Despite Galaxy Note 7 recall Samsung Q3 earnings rise on chip and display sales

Samsung's Q3 earnings guidance for 2016 shows the electronics manufacturer remains strong despite a mammoth smartphone recall. Beating market estimates, the company expects a profit growth of 5.6%, with its strong chip and display earnings helping it ease the impact of the global Note 7 recall.

"Obviously the Note 7 recall costs were reflected but (business) segments such as memory and OLED (organic light-emitting diode) displays did well and will probably continue to do so until at least next year," IBK Asset Management fund manager Kim Hyun-su told Reuters.

The smartphone maker declared that its operating profit for July-September was likely to hit 7.8tn won ($7bn, £5.6bn), compared to a year earlier when its operating profit was 7.4tn won. The net income and divisional figures will be released when the company discloses its earnings later this month.

Although heavy costs have been estimated for the Korean smartphone maker on account of its Note 7 recall, its strong position as a key supplier of displays and memory chips has helped it sail through. However, a Bloomberg analysis cut the estimates of Note 7 sales by 38% to 8 million units this year.

Meanwhile, the company is still grappling with the Note 7 crisis with reports surfacing of an explosion incident on a Southwest Airline flight recently. At the same time billionaire activist Paul Elliott Singer, whose hedge fund owns 0.62 % of the South Korean giant, has appealed for modernising Samsung and has started a campaign to get the family-controlled company to restructure.