Samsung Reports Worst Quarterly Profits in Two Years

Samsung-LogoSamsung has issued its Q2 financial results, revealing it suffered its worst quarterly profits in two years, and that it was uncertain about its earnings prospects for the rest of the year.

Operating profit fell 24.6 per cent year on year, down to ?7.2 trillion (£4.13bn), while for the mobile division alone, profits fell from ?6.28 trillion in Q2 2013 to ?4.42 trillion. This was the third straight quarter of declining profits, and the weakest quarterly result since Q2 2012.

The company suffered its worst daily percentage drop on the stock market in nearly eight months due to its downbeat forecast and the decision to keep its interim dividend unchanged from last year.

Samsung promised investors it would revamp its mid-to-low-tier product lineup with a smaller group of products and a more aggressive pricing strategy as its cheaper devices are challenged by rival Chinese brands like Xiaomi. With its flagship Galaxy S5 smartphone losing out to Apples iPhone 5S in May sales figures, theres also pressure at the top of the line.

Q3 handset shipments are expected to rise by 10 per cent from this quarter and there are plans for a new premium smartphone, with an innovative design and material, but the report still forecast a decline in average sale price for the mobile division from Q2 to Q3.

“Considering intensifying competition of price and specifications as well as the release of new competing models, it is difficult to expect earnings to improve from the second quarter,” said senior vice president Kim Hyun-joon.