South Korea’s Samsung reported today that its Q2 operating profit is expected to fall 4 per cent to KRW6.9 trillion ($6.13 billion) from a year ago, while revenue looks likely to drop 8.3 per cent to KRW48 trillion.
Analysts had forecast an operating profit of KRW7.1-7.2 trillion. The company’s estimate, however, was up 15.4 per cent from its operating profit of KRW5.98 trillion in Q1 and its highest for four quarters. But it also was its seventh straight period of annual decline, Reuters said.
The company’s Q1 net profit fell 39 per cent to KRW4.63 trillion, on revenue of KRW47.12 trillion, down 12.2 per cent.
After a tough first quarter, there were some signs that Samsung was regaining its growth momentum in its mobile business. Its new flagship Galaxy S6 models were the second-best selling smartphones in April after Apple’s iPhone portfolio, according to Counterpoint Research.
Despite the early success of the Galaxy S6, it has not been able to expand its market share.
A softening of the worldwide smartphone market, and supply shortages, have led to slower than expected sales of its Galaxy S6 lineup, which have more than offset higher returns in its chip business in Q2.
“Overall shipments of the S6 have not been as good as hoped, causing the revenue miss reported,” wrote Dr Richard Windsor in his Radio Free Mobile blog. “The good news is that margins have held up well.” In fact, Windsor expects Q2 to be “the last quarter where the headlines are overwhelmingly negative,” driving “low single digit earnings growth for at least the next couple of years.”
Samsung is expected to report its full results in late July.