Strong Galaxy S7 smartphone sales drive highest Samsung profit in 2 years

28 Jul 2016

Samsung owes its positive reversal in fortune to demand for its flagship S7 smartphone devices

Demand for its flagship Galaxy S7 smartphone has led to Samsung reporting its highest profit in two years, at $7.2bn.

For its second quarter, Samsung reported revenues of $45.2bn, up 5pc year-on-year.

Samsung’s IT & Mobile (IM) Communications Division saw substantial earnings improvements, led by sales of its high-end Galaxy S7 and S7 Edge smartphones.

Future Human

This is completely at odds with last year, when a poorly-planned roll-out of S6 smartphones impacted on profitability.

Samsung’s Consumer Electronics (CE) business achieved strong growth, thanks to a premium line up of TVs and white goods products.

Profitability was also enhanced by a more streamlined line-up of mid-to-low-end smartphone devices.

Samsung turns around a battleship

Q2 performance was also bolstered by a strong performance in Samsung’s components businesses, particularly in areas like display panels and semiconductors, most notably 14-nanometer processors and 20-nanometer DRAM.

“Looking ahead to the second half of 2016, the company expects its solid performance to continue compared to the first half, mainly driven by earnings increase in the component business due to sales growth in high value-added products and stable demand and supply conditions,” Samsung said.

“The set business is expected to continue its stable earnings, while the IM Division expects marketing expenditure to increase.

“In the third quarter, the company expects the component business to maintain its solid performance due to improved demand and supply conditions for memory chips and LCD panels and stable earnings for OLED and System LSI.

“For the set business, the company forecasts marketing expenditure for the IM business to increase mainly due to a new flagship product launch and fierce competition in the industry. Meanwhile, weak seasonality is likely to impact the CE business,” Samsung warned.

Galaxy S7 image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years