Samsung sees Q1 profit drop; Galaxy S6 set to drive Q2 sales

Samsung sees Q1 profit drop; Galaxy S6 set to drive Q2 sales

29 APR 2015

Samsung’s tough times continued into the first quarter of 2015, although there were some positives as the company strives to “regain the growth momentum” in its mobile business.

For its IT & Mobile unit, of which IT is by far the largest part, the company reported a 57.4 per cent year-on-year drop in operating profit to KRW2.74 trillion ($2.56 billion), on revenue which fell 20.2 per cent to KRW25.89 trillion. But, compared with the prior sequential quarter, operating profit actually increased by 39.8 per cent, on revenue which decreased by 1.5 per cent.

The company attributed the increase in quarter-on-quarter operating profit to decreased marketing expenses and the rollout of its new entry-level and mid-range smartphones.

Much of the company’s future success hinges on the performance of its Galaxy S6 and Galaxy S6 Edge. But with the launch of the new premium devices, Samsung said that marketing expenses will rise in Q2 to support this.

In the first quarter, Samsung shipped 99 million handsets, of which “mid-80 per cent” were smartphones. The company expects its Q2 performance to be similar, but with a shift in mix following the launch of the new flagships set to improve its average selling price.

The numbers mean that Samsung remains the world’s number one handset vendor. Its smartphone leadership position was also reasserted, after Apple saw a dip following earlier strength thanks to launch of its new iPhone line – with a single smartphone line, Apple’s performance is more than usually affected by its release timetable.

Tablet sales in Q1 were “about nine million”.

Network revenue declined quarter-on-quarter due to decreased investment by overseas operators.

Samsung is looking to drive its 2015 growth by enhanching its product competitiveness and improving R&D efficiency by “streamlining line-ups”. Robert Yi, SVP of investor relations, said: “We are striving to regain the growth momentum with innovative designs using flexible displays and wireless charging, as well as strengthening mobile service platforms, such as Samsung Pay.”

On a group level, the company reported a net profit of KRW4.63 trillion, down 38.8 per cent year-on-year, on revenue of KRW47.12 trillion, down 12.2 per cent.

“Samsung Electronics has been focused on technology and product innovations to respond to rapid changes in the IT industry. We believe that 2015 will be an important year as we strive to lead the changes and innovations,” Yi said.

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Steve Costello

Steve works across all of Mobile World Live’s channels and played a lead role in the launch and ongoing success of our apps and devices services. He has been a journalist...More

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