Samsung Warns Q2 TV & Phone ‘Significant Decline’
Samsung has warned its core TV and smartphone business could notably decline in Q2, as demand for the new Galaxy S20 and Galaxy Z Flip failed to considerably lift Q1 results during the coronavirus pandemic.
For the quarter ending March 31, total revenue notched ~US$42.8 billion – in line with the company’s recent preliminary earnings forecast.
Sales jumped 5.6% year-on-year, but net profit slipped just over 3% versus the same period.
Sales growth during the period was partially driven by strong demand from memory and server chips, as PC sales jumped amid a climb in work-from-home staffers.
Samsung warns a significant decline in its TV and phone business is likely in Q2 as it grapples with the pandemic.
“Looking ahead to the second quarter, the company expects the memory business to remain solid, but overall earnings are likely to decline from the previous quarter because COVID-19 will significantly impact demand for several of its core products,” reads the company’s statement.
“In the second half, uncertainties driven by COVID-19 will persist as the duration and impact of the pandemic remain unknown.”
“Sales and profits of set products business, including smartphones and TVs, are expected to decline significantly as COVID-19 affects demand and leads to store and plant closures globally.”
The company has pledged to raise its online sales capabilities during the pandemic, whilst further mobilising global supply chain and production operations.
The news comes as Samsung further ramps up its Galaxy A series of smartphones, which it hopes will garner momentum to budget-conscious customers.
COVID19 has disrupted the plans of many electronics manufacturers, including Samsung who was tipped to gear up their 5G and foldable phone portfolio.
The economic impact of the coronavirus pandemic is set to notably impair premium electronics sales, with some commentators suggesting brands could delay the launch of high-tech products until later next year.
COVID19 has not just impact consumer demand, but restricted manufacturing capabilities in Asia.
Research firm CCS Insights expects a 13% slump in smartphone shipments this year, to around a decade’s low.
The news comes after Samsung winded down its LCD business, and is committed to keeping “continued leadership” in the oLED Market.
Read the full earnings announcement here.