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Samsung Posts 8% Q2 Profit Drop Amid Smartphone Challenges

Samsung Posts 8% Q2 Profit Drop Amid Smartphone ChallengesSamsung posted net profit of 5.75 trillion won (around $6.75 billion) for the quarter, down from 6.25 trillion won year-on-year, with revenue for the quarter of 48.54 trillion won down from 52.35 trillion won. Operating profit of 6.9 trillion won was down from 7.19 trillion won year-on-year.

“Despite the launch of Galaxy S6, improvement to earnings was quite marginal due to low smartphone shipments and an increase in marketing expenses for new product launches,” Samsung stated upon release of the results.

Samsung noted that it had experienced “supply difficulties from higher-than-expected market demand for the Galaxy S6 edge”, while attributing a drop in overall smartphone shipments to declining shipments of older middle-to-low-end models.

The International Data Corporation (IDC) recently found that Samsung’s smartphone market share declined in the 2015 second quarter, with Samsung, occupying the world’s number one smartphone vendor spot, claiming 21.7 per cent market share, down from 24.8 per cent year-on-year.

Samsung was the only company among the world’s top five vendors to see its shipments decline year-on-year, with shipments of 73.2 million units for the quarter down from 74.9 million.

“In 2H 2015, the smartphone market is expected to grow YOY; however, the growth rate is expected to slow down,” Samsung stated.

“The mobile business plans to firmly maintain its sale of premium smartphones by flexibly adjusting the price of the Galaxy S6 and S6 edge, and launching a new model with a larger screen. Supply issues concerning the Galaxy S6 edge have been addressed.”

Samsung’s IT & mobile communications division posted operating profit of 2.76 trillion won, down from 4.42 trillion won year-on-year.

Meanwhile, Samsung’s consumer electronics business posted operating profit of 210 billion won, down from 770 billion won year-on-year, with Samsung noting the TV market has been stagnant. Samsung stated that although market demand for TVs is expected to remain at the same level year-on-year in the second half, demand for UHD and large-screen TVs is expected to increase.

Samsung’s device solutions division, encompassing its semiconductor business, posted an operating profit of 3.87 trillion won, up from 2.09 trillion won year-on-year.

Samsung earlier this week announced an Unpacked event to take place on August 13 in New York, with speculation being that it is set to unveil two new flagship smartphones in the form of the Galaxy Note 5 and the Galaxy S6 edge plus.