Samsung's mobile business drives Q2 earnings
By Lee Min-hyung
Samsung Electronics reported operating profit of 8.14 trillion won ($7.23 billion) in the second quarter, up 18 percent from a year earlier, on solid sales of its flagship handset Galaxy S7 and improved profitability in its semiconductor business.
In its quarterly earnings report to the exchange, the company said its sales were 50.94 trillion won, up 5 percent from a year earlier.
It is the first time in nine quarters that quarterly operating profit has topped 8 trillion won.
The robust earnings were largely in line with its previous estimate unveiled earlier this month, proving that the company has successfully rebounded.
“Galaxy S7 and S7 Edge have driven up profits, with other mid- to low-tier handset series, such as Galaxy A and Galaxy J, also contributing to our quarterly earnings growth,” a Samsung Electronics official said.
The company’s IT and mobile communication (IM) division accounted for the lion’s share of its overall profit during the April-June period. The mobile division posted 4.32 trillion won in operating profit on sales of 26.6 trillion won.
Samsung’s solid growth is in contrast to Apple’s revenue decline. The iPhone maker posted a 27 percent drop in net income in the three months to June 25.
“Demand for smartphones and tablets is expected to grow in the second half of the year on seasonal factors, but increased marketing costs to take on competitors will affect our third-quarter earnings to some extent,” the official said.
The company also posted strong growth in its consumer electronics (CE) business, with its divisional operating profit coming in at 1.03 trillion won. This is the first time in seven years that the division has topped 1 trillion won in quarterly operating profit since it posted 1.16 trillion won in the second quarter in 2009.
“Our premium lineups ― including super ultra-high-definition (SUHD) televisions and Chef Collection refrigerators ― have driven the robust sales growth for the division,” the official said.
But a prolonged global economic slowdown and shrinking consumer sentiment might dent demand in the rest of the year, officials said.
The company’s semiconductor division posted modest growth. Its operating profit was 2.64 trillion won, up 0.38 percent on the year-ago quarter but down 22.36 percent year-on-year.
The company said the quarter-on-quarter improvement came as growing demand for mobile NAND flash memory chips helped offset falling DRAM chip prices. It expects the semiconductor business to drive the firm’s third-quarter profit, as prices and demand for DRAM and NAND flash chips are on a stable recovery track.
In the first half of the year, the company had allocated 8.8 trillion won to equipment investment for the semiconductor and display business.
“Our yearly investment plan on manufacturing facilities has yet to be decided, but it will slightly exceed that of last year,” the official said.
The company said it will focus on expanding production capacity for organic light-emitting-diode (OLED) panels for smartphones and solid state drive (SSD) products based on 48-layer V-NAND technology.