Samsung Q2 profits slump, electronics giant cautiously predicts a better Q3

8 Jul 2014

The Samsung Galaxy S5 smartphone

Korean consumer electronics brand Samsung has cautiously predicted a recovery in smartphone sales later this year, despite producing a lower second-quarter profit than analysts had forecast.

The company produced unaudited financial results for the second quarter, in which it said it expects second-quarter operating profits to fall to 7.2trn won, or US$7.1bn, below analyst expectations of 8.6trn won.

This is a 24pc decline from a year ago.

Samsung expects revenues to fall by 10pc to US$51.4bn.

A factor in the weak performance could be the Korean won’s appreciation versus the euro.

Smartphone slowdown

Samsung said it witnessed a slowdown in overall smartphone market growth and saw increased competition in the Chinese and some European markets.

This, it claims, has lead to higher inventories for low to mid-end smartphones.

It is estimated Samsung shipped between 77m and 80m smartphones during the second quarter, short of the 90m that analysts had predicted.

With lacklustre sales of its latest high-end smartphone, the Galaxy S5, Samsung faces a significant challenge with the launch of the reported Apple iPhone 6 in the autumn.

Samsung is believed to have sold 17m Galaxy S5 units during the second quarter but may only shift 6m units in the third quarter.

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