Samsung flags drop in operating profit in Q2
Print Edition
SAMSUNG Electronics yesterday flagged a second-quarter drop in operating profit that missed analyst estimates after sales of its newest flagship smartphone failed to meet expectations.
The earnings forecast came as a South Korean court ruled in Samsung’s favor against a US hedge fund’s efforts to block the proposed merger of two major affiliates
The smartphone and memory-chip maker predicted operating profit of around 6.9 trillion won (US$6.1 billion) for the April-June period, down more than 4 percent from a year earlier.
That compared with the 7.2 trillion won average of 33 analyst estimates compiled by Bloomberg News, but still marked a 15 percent increase from the first quarter.
Yesterday’s estimate, which comes ahead of audited results to be released later in the month, did not provide a net income figure.
It also gave no breakdown of divisional earnings.
Samsung has seen profits sag since late 2013 on stiff competition in an increasingly saturated smartphone market that it had dominated for years.
Samsung has faced a double challenge from US arch-rival Apple in the high-end smartphone market and rising Chinese firms like Xiaomi in the mid- and low-end market.
Hopes of a turnaround had largely been pinned on the sixth edition of its flagship smartphone launched in April.
The Galaxy S6 and S6 Edge with a wraparound screen received rave reviews, but company view of record sales fell below expectations, partly due to output and supply woes.
Overall sales were around 48 trillion won in the second quarter, Samsung said yesterday, compared with the 53 trillion won average of 37 estimates.
“Shipments of the Galaxy S6 were clearly not as strong as had been hoped for,” said Greg Roh of HMC Investment Securities Co, citing manufacturing delays that trimmed sales of the S6 Edge.
Samsung then slimmed down its line of mid- and low-end smartphones last year, and ramped up output of those that remained in a higher-volume, lower-price strategy.
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