Samsung faces profit slump amid weaker Galaxy demand

SAMSUNG Electronics forecast its first profit decline in seven quarters yesterday, with analysts pinning the blame on weak sales of its smartphones.

The Korean giant issued profit guidance of 14.8 trillion won (£10bn) in operating profit for the April-june quarter, down from 15.6 trillion won in profit from the previous quarter.

The guidance ends a lengthy run of record profits for the Korean electronics company, which has seen a downturn in sales of its flagship smartphone products, analysts said.

Lee Won-sik, an analyst at Shinyoung Securities, said that “it’s going to be tough” for Samsung’s smartphone division. “The smartphone market is not growing any more but the competition is intensifying,” he said.

Samsung had hoped that its flagship line of Galaxy phones would sell strongly in leading markets such as China and India, but the company has faced strong competition from rivals Xiaomi and Huawei.

Apple’s iphone X, which it released in November, has also outsold Samsung’s recent flagship phones.

The Galaxy Note 9, Samsung’s next smartphone, will be announced in August. Samsung’s recent Galaxy S9 phone, which it released in June, reportedly sold at the worst rate for one of its handsets since 2016’s Galaxy S7.

Samsung shares are down around 14pc this year, and the weak profit guidance pushed them 2.5pc lower yesterday.

However, Samsung’s chip business has been more successful. The company’s semiconductor unit forecast its seventh consecutive record quarterly profit yesterday, and the chip business makes up around a third of Samsung’s revenues.