Samsung Q2 sales fall short of expectations

Samsung Electronics reported revenues down to KRW 52 trillion for the second quarter, from KRW 54 trillion a year ago, hurt by a slowdown in demand for smartphones and tablets and the stronger won. Operating profit dropped 23 percent from a year earlier to KRW 7.2 trillion, according to the preliminary figures. 

 

 

Samsung said it stepped up marketing in order clear excess inventory in sales channels ahead of planned new product launches in the third quarter. Inventory was especially high for mid-range and low-end devices, due to increased competition in China and Europe, the company said. The Chinese market was also hurt by weak seasonal demand and reduced 3G demand ahead of the expected expansion of LTE during the second half of the year.

Tablet shipments were also less than expected, with Samsung noting the lack of carrier subsidies for the devices meant a slower replacement cycle. The demand for 5-6 inch smartphones also cannibalized the market for 7-8 inch tablets, the company said. The weak demand for smartphones also affected Samsung's System LSI and display businesses, which provide components for the mobile devices.

Samsung said it expects smartphone shipments to pick up in Q3, helped by new product launches. This should also increase display panel shipments, and the memory division should benefit from more favorable seasonal conditions.