Samsung's smartphone fiasco burns up earnings at mobile arm

Samsung's profits went up in smoke in the third quarter as the cost of its exploding smartphone scandal almost entirely wiped out earnings from its mobile division.

The Korean tech giant revealed operating profits slumped 30% to 5.2 trillion won (£3.8 billion), the lowest level in two years, after it pulled the plug on its flagship Galaxy Note 7 smartphone following reports some were catching fire.

Profits from its smartphone arm were just 100 billion won (£72 million), compared with 2.4 trillion won (£1.7 billion) in the same period last year, narrowly avoiding a first ever loss for the tech company’s largest division.

The world’s biggest smartphone maker said it would work on new handsets to win back consumers.

“The company will focus on expanding sales of new flagship products with differentiated design and innovative features, as well as regaining consumers’ confidence,” it said.

Samsung predicted sales would recover in the final quarter with Christmas shoppers expected to buy its other handsets, the Galaxy S7 and S7 Edge.

It came as shareholders approved the appointment of Lee Jae-yong, seen as Samsung’s heir apparent, to the board amid a changing of the guard.