SAMSUNG POSTS LOWER Q2 PROFIT ON WEAK SALES
Conglomerate warns of tougher competition ahead for struggling mobile sector
SAMSUNG Electronics Co Ltd posted its slowest quarterly profit growth in more than a year yesterday due in part to weak sales of its Galaxy S9 smartphones, and warned of tougher competition ahead for the mobile sector.
The Apple Inc components supplier and smartphone rival said operating profit from the mobile business sank 34 per cent from a year ago as cheaper Chinese-made handsets put pressure on margins.
The South Korean tech giant gave investors little reason to hope for a quick turnaround in the mobile business, flagging stiffer competition in the second half amid concerns its premium phones lack innovation to drive sales growth.
“Samsung was already lost to China in price competition and is getting threatened by Chinese models in designs and hardware strength,” said Park Jung-hoon, a fund manager at HDC Asset Management.
Higher marketing expenses and disappointing sales of the S9, which fell short of its target, weighed on its mobile performance, said Samsung.
Competition would heat up in the coming months as new smartphone models were released, it added. In response, Samsung would “seek to expand sales by introducing a new Galaxy Note earlier than usual”, it added.
Samsung is scheduled to launch a new Note series early this month.
Apple is expected to report a rise in revenue and profit for the third quarter yesterday, helped by resilient sales of its iPhones in a period of slower growth for the global smartphone market.
It remains to be seen whether Samsung’s difficulties in the mobile business, which accounts for about 40 per cent of its revenue, are the result of its own failings or reflect the industry slowdown more broadly.
The company said operating profit rose 5.7 per cent to 14.9 trillion won (RM54.01 billion) in the second quarter, slightly ahead of its 14.8 trillion won estimate.
Revenue for the April-June period fell four per cent to 58.5 trillion won.
The mobile business booked a 34 per cent fall to 2.7 trillion won in quarterly operating profit, its biggest decline since the Galaxy S7 was its flagship model early last year.
Data released by market tracker Counterpoint Research in July showed Samsung’s latest Galaxy 9 Plus premium handset had been overtaken by Apple’s iPhone 8 as the world’s top-selling smartphone.