South Korean multinational Samsung Electronics has continued its positive stride from the first quarter and today announced its more-than-fulfilling second quarter results, fueled by mobile and component businesses. Overall earning of the company has improved on account of continuous increase in sales of premium range of products, specially smartphones.
In the current quarter, the company’s revenue soared KRW* 2.40 trillion ($2.13 billion), amounting to KRW 50.94 trillion($44,5 billion). While the operating profits for the second quarter saw a rise of 18 per cent, amounting to KRW 8.14 trillion($7.23 million) as compared to KRW 6.68 trillion in the previous quarter.
In addition to this, the strong sales of their flagship devices Galaxy S7 and S7 Edge led to substantial earning improvements in the mobile division. It posted an operating profit of KRW 4.32 trillion($3.82 billion) which is also higher than its two-year high of KRW 3.89 trillion in the previous quarter. This rise could also be attributed to the streamlined mid-to-low end smartphone lineup, such as the Galaxy A and J series, that debuted this year.
Even after the sales proportion of the flagship device Galaxy S7 Edge rose over 50 per cent, still the mobile division’s consolidated revenue dipped to KRW 26.56 trillion, as compared to KRW 27.60 trillion in the previous quarter.
Samsung has also planned to debut its next flagship device(or phablet) — the Galaxy Note 7 — on 2nd August. The company is skipping on Note 6 — as stated above — to streamline its product lineup and clear any confusion created due to the naming hierarchy. The smartphone is also expected to host the first-ever iris scanner for unlocking the device.
As the market competition strengthens due to the entry of several new Chinese smartphone players(ahem! Xiaomi), Samsung believes that demand for smartphones and tablets will increase in the second half of the year. The company previously had no competitor for its flagship Galaxy S7 and S7 Edge devices in the first and second quarter, but it will now face Apple who is expected to launch the new iPhone 7 in September. The company, however, will stay focused on strengthening and maintaining profitability in its high-end, and mid-to-low end products.
Samsung also added that it expects to increase shipments in the next quarter but profitability will probably be affected by higher marketing costs. Amid global slowdown in demand, it still expects to increase shipments to China as well.
Semiconductor Components
Samsung has also invested KRW 4.2 trillion in two important businesses, including KRW 2 trillion in semiconductors and KRW 1.6 trillion in OLED and LED displays.
The semiconductor business has reported a consolidated revenue of KRW 12 trillion, alongside KRW 2.64 trillion in operating profit for this quarter. The semiconductor NAND business has enjoyed strong growth fueled by orders for high-density NAND and DRAM products, coupled with reduction in cost from continuous process migration.
As the demand, production and competition in the smartphone and tablet market heats up, the company is looking forward to increased adoption of high-density DRAM products and strong seasonality of SSDs. This will also lead to an increase in adoption and shipment of 6GB memory chips and mobile DRAMs in the third quarter.
Consumer Electronics
Samsung Electronics is also an active manufacturer in the consumer electronics space, and has also posted a improved and strong earning report for the same. The improved sales have been led by its premium offerings such as SUHD TVs, Chef Collection Refrigerator, AddWash washer and newly launched air conditioners.
Though the global demand for TV remained fairly dismal in emerging markets, but still the company managed to clock a consolidated revenue of KRW 11.55 trillion, in addition to the KRW 1.03 trillion in operating profit.
The appliance business continued to follow the growth trajectory in North America, but the global demand declined yet again, due to slower growth in China and other emerging markets. However, looking forward to the second half, Samsung believes that the demand for TVs would decline even further due to slowdown in Europe, after the exit of Britian from the EU. But, it will try to complement the same by seeking to grow sales of its premium SUHD TV line-up and also achieve growth by enhancing its B2B business in this sector.
Samsung in the earning call said that it will continue to diversify its client portfolio, and has again secured Qualcomm as a client. It has thus been winning over more Chinese clients in the recent years. Its special edition releases including the special Active and Olympic Galaxy S7 and S7 series, alongwith improved yield rate for quantum dot LCD TVs has added to the stunning results.
The company is now also expanding its mobile payment service to more parts of the worlds, and has recently step foot into Latin America, and Singapore respectively.
