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Samsung 8217 s profit fall 8 in Q2

Article By: ,  Financial Analyst
July 30, 2015 5:36 PM

Electronics giant Samsung posted a net profit of 5.75 trillion won (£3.2 billion) for the second quarter of the year – down eight per cent for on the same period last year.

The decline is the fifth straight year-over-year profit drop, as rivals continue to weigh on Samsung’s market share and profit margins.

The company has long been boosted by its mobile division but this has struggled to retain its dominance against rivals such as Apple and Chinese smartphone-makers like Xiaomi. With the launch of products like the iPhone 6 and the iPad, Apple has been able to keep up its strong performance levels.

The mobile division’s operating profit slid 37.6 per cent to 2.76 trillion won in the second quarter from a year earlier.

"While the numbers are in line with what's been expected, the real story is that Samsung used to be this huge industry giant, dominating the smartphone field. And now that giant seems to be tumbling under pressure from Apple in the top-segment and cheaper Chinese competitors," Bryan Ma, vice president of client devices research at technology consultants IDC, told the BBC.

Samsung's Galaxy S6 blamed

Mr Ma said the company could in theory compete with the cheaper Chinese rivals "but it would hurt their margins. And then, even with good sales, it would hurt their profit."

He added: "When it comes to competing with the iPhone – Apple has an entire ecosystem around their devices which Samsung just doesn't have."

Analysts put the blame on Samsung’s flagship smartphone series, the Galaxy S6, with the regular S6 not selling as well as expected.

The S6 edge has been billed as Samsung's most elegant phone ever, encapsulated with a number of high-end materials, shimmer-effect cases and smooth finishes throughout. But it proved hard to manufacture, with Samsung struggling to keep up with demand.

“The failure to manage the initial shipment for the Galaxy S6 series is the primary reason” for disappointing sales, said Lee Ka-keun, an analyst at KB Securities. Samsung said it is bringing on a third plant to boost production.

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