Samsung’s Operating Profits Drop by 56% in Q2 2019

Samsung Electronics has posted its financial results for the second quarter that ended on June 30, 2019. Just as predicted, the company is struggling to maintain its profits. Samsung saw its operating profits drop by an alarming 56% year on year.

The company’s operating profits came in at KRW 6.6 trillion for the second quarter, which is a small increase over last quarter’s results, but much lower than last year’s KRW 14.87 trillion.

Major Drop in Mobile Profits

Samsung’s mobile business saw a 42% drop in profit due to slow sales in the flagship sector. The company admitted that “weak sales momentum for the Galaxy S10 and stagnant demand for premium products” along with high marketing prices were some of the factors that caused a decline in profits.

At least Samsung’s mid-range Galaxy A series seems to be doing well, contributing towards a 5% increase in revenue due to solid sales. The company’s network business is also doing well following the commercialization of 5G in South Korea and LTE in international markets.

Decline in Semiconductor Business

The semiconductor business also suffered due to weak demands and declining prices. Samsung posted consolidated revenue of KRW 16.09 trillion and an operating profit of KRW 3.4 trillion for its semiconductor division – which was down by roughly 71% compared to last year.

Looking forward, Samsung expects an increase in demand for its NAND and DRAM components in the future, making up for the loss of Q2.

On a more positive note, Samsung’s display panel business brought in some healthy returns thanks to increased demand for OLED screens and in-display fingerprint sensors. Increasing sales for home appliances was also another bright spot in its financial results.

As for the declining mobile business, Samsung responded by saying:

In the third quarter, Samsung will focus on successful launches of new innovative products – the Galaxy Note 10 and Galaxy Fold. It will enhance the 5G smartphone lineup to take the lead in the new market and introduce more competitive A series models in the second half to extend the ongoing positive momentum in mass market smartphone sales.

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