Samsung confirms weak Q2 as S6 sales disappoint

Samsung confirms weak Q2 as S6 sales disappoint

30 JUL 2015

Samsung confirmed it saw a tough time in the second quarter, acknowledging that sales of its flagship Galaxy S6 line had been “below expectations”.

In a conference call, it admitted that it had been caught out by the level of demand for its Galaxy S6 Edge device, the higher-tier member of the family, although supply issues have now been resolved.

The company said that it will make “strategic adjustments” to the price of the product moving forward.

Operating profit in the company’s IT & Mobile unit was KRW2.76 trillion ($2.35 billion), down 37.6 per cent year-on-year, on revenue of KRW26.06 trillion, down 8.4 per cent. Mobile sales make up 98 per cent of the division’s total.

Highlighting the positive, Samsung said that its operating profit in the division was up 0.7 per cent compared to the prior sequential quarter, while revenue was up by the same amount.

The quarterly growth was attributed to the expansion of Galaxy S6 sales, while its profit was impacted by a shift in product mix away from mid/low-end smartphone shipments and increased marketing expenses.

Shipment volume decreased quarter-on-quarter, due to weakness with older and mid/low end models, although ASPs increased due to the product mix shift. It shipped a total of 89 million handsets, with the proportion of smartphones in this in the “low 80 per cent” range.

In its networks business, Samsung noted that profit decreased quarter-on-quarter due to reduced investments from domestic and overseas carriers on LTE kit. It will look to “actively expand into new markets” going forward.

The South Korean handset giant said it expects to increase total smartphone shipments with new model launches to enhance model line-ups – the company has an event scheduled for 13 August, and also traditionally introduces devices at IFA in September.

Tablet shipments are expected to stay similar sequentially – the company recently refreshed its high-end line in this segment, and other new products are incoming. It shipped 8 million tablets in Q2.

On a group level, the company reported a net profit of KRW5.75 trillion, down 8 per cent year-on-year, on revenue of KRW48.54 trillion, down 7.3 per cent.

Samsung’s components business was something of a star performer, with operating profit up 85.2 per cent year-on-year to KRW3.87 trillion, on revenue up 10 per cent to KRW17.87 trillion.

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Steve Costello

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