For the first time in three years, Samsung Electronics has seen a drop in quarterly profits. Now, these figures are not as dramatic as they sound, since the company still made billions in net profit, but one of the contributing factors behind Samsung’s Q2 drop in profits were due to the traditionally strong Samsung Mobile division.
One day after IDC released a report on the top five smartphone vendors in Q2 of this year, showing a startling drop in market share for the two top smartphone makers, Samsung and Apple, the Korean giants’ latest financial figures have appeared to confirm the earlier report. The figures also were in line with the company’s recent earnings estimates, that mentioned a possible drop in smartphone sales for the mobile division.
Year-on-year, the company’s profits dropped over $1 billion for Q2 2014, recording only $6.1 billion in net profit – down from $7.58 in the same period last year. Crucially, the mobile division saw a drop in smartphone and tablet sales, which the company attributed to “traditionally low market demand” in Q2. This is despite the company’s flagship Galaxy S5 being launched in April this year.
In addition, the appreciation of the Korean won was also another contributing factor to Samsung’s lower-than-expected profits. The company states that the stronger currency resulted in “about 500 billion won (about $488 million) in missed revenues”.
Looking ahead, the company expects the second half of the year to “remain a challenge”, but expects the Consumer Electronics division to perform well with its latest range of UHD and curved display TVs. As for the mobile division, Samsung says prospects for growth “remain unclear”, signalling a worrying period for the market leaders. It has stated that it expects sales to continue going up “with the rollout of flagship products and new models” but that profits may be affected by the competition.
Of the products and new models, the company stated that it will release a new flagship in the “large screen category”, virtually confirming the existence of the Galaxy Note 4, and new mid-to-low-end models with “more advanced features and competitive pricing”.