Samsung said it experienced pressure on its top line in the second quarter of 2018, with profitability growth also halted, against a backdrop of concern about sales of premium smartphones.
The company’s guidance for the quarter – which lacks the detail of the full report – indicated revenue of around KRW58 trillion ($51.9 billion), compared with KRW61 trillion in the prior-year period and KRW60.56 in Q1 2018.
Operating profit of KRW14.8 trillion would mark an improvement year-on-year (from KRW14.07 trillion), but be worse than the KRW15.64 trillion seen in Q1. Financial Times stated this is its first profit decline in seven quarters.
While Samsung did not provide any colour to accompany the numbers, it is no secret that the smartphone market is not in a period of strong growth, particularly at the high end. While its current flagship, Galaxy S9, started off selling well, this is now believed to have slowed.
Galaxy S9 was in many ways an incremental release for Samsung, building on the foundations of Galaxy S8 from 2017. The company is also holding an event early next month to unveil its next Note-branded flagship, which it will hope reinvigorates sales into the tail-end of 2018.
The tough smartphone market has also meant more spend on marketing for Samsung, which impacted profitability.
Bloomberg also suggested Samsung’s components business – which often benefits from strength in the smartphone market beyond the company’s own products – had been impacted by lower than expected OLED screen sales to Apple: chip price growth is also moderating.
On the component side, the report also suggested Samsung may benefit from the continued US-China trade war, in that it offers an alternative to companies on both sides of the fence.