Samsung Electronics reported higher earnings for the second quarter, helped by continued demand for its memory chips as well as a one-time gain at its display business. This helped offset the slump in the smartphone market and overall weaker consumer demand in April and May. Samsung said it expects a gradual recovery in demand for mobile devices and consumer electronics in the second half of the year, helped by the launch of new products.
Total revenues at the company fell 6 percent to KRW 52.97 trillion, while operating profit was up 23 percent to KRW 8.15 trillion. The net profit rose to KRW 5.56 trillion from KRW 5.18 trillion a year ago. The company's EBITDA margin improved to 28 percent from 24 percent a year earlier, and capital expenditure reached KRW 9.8 trillion, including KRW 8.6 trillion spent on semiconductors and KRW 0.8 trillion on displays.
At the mobile division, Samsung's revenues fell 20 percent year-on-year to KRW 20.75 trillion, while operating profit increased to KRW 1.85 trillion from KRW 1.56 trillion. Samsung said smartphone sales were impacted by stores closures around the world and slower 5G roll-outs due to the Covid-19 outbreak, while profitability improved thanks to lower marketing spend.
While uncertainties remain about the impact of the coronavirus crisis, Samsung expects sequential growth in third-quarter mobile sales, thanks to the upcoming launch of the new Galaxy Note model and another foldable device. Competition is expected to increase in the second half, as phonemakers look to make up for the weak start to the year, the company said. It will continue to focus on optimising costs, including profitability of its mass market range.
The semiconductor division benefited from increased computing demand as more people worked from home during the pandemic. Revenues rose 13 percent to KRW 18.23 trillion, including 19 percent growth in memory sales, and operating profit jumped to KRW 5.43 trillion from KRW 3.40 trillion a year ago. Solid server demand is expected to continue in the second half, as well as a pick-up in DRAM and NAND sales thanks to new smartphone launches.
