Samsung cuts profit forecast over Galaxy Note 7 catastrophe

Samsung warned that profit will take a £1.9bn ($2.3bn, €2.1bn) hit from pulling its Galaxy Note 7 smartphones off the market.

The South Korean firm said its third-quarter operating profit is expected to come in at 5.2trn won (£3.7bn, $4.5bn), down from previous estimates of 7.8trn won.

The company made the announcement in a surprise regulatory filing after financial markets closed in South Korea.

The flagship Note 7 was recalled last month after battery fires, but after replacement phones experienced the same problem, which led to Samsung scrapping the device on Tuesday (11 October).

The technology giant's shares have fallen almost 9% over the last two days, wiping more than $20bn off its market value.

Analysts suggest the Note 7 crisis could be more costly to Samsung in the long run, particularly coming just as rivals, such as Google and Apple, have announced new high-end smartphones.

"We think the Note 7 incident may hurt demand for Samsung's other smartphone models as well. It might even slash the company's fourth-quarter mobile division profit by around 85%," said Nomura analysts in a note after the production halt of the Note 7.

The firm also announced it had been forced to pay for fire-resistant packages to send to its customers in the US so they can safely return devices to retailers.

The shipping boxes, the company explained, were a legal requirement for shipping lithium-ion batteries or products containing them.