Samsung Q2 revenues fall on weaker-than-expected demand for S9

Samsung reported second-quarter results in line with guidance but lower year-on-year and quarter-on-quarter. The company was especially hit by weaker-than-expected sales for its Galaxy S9, which it tried to compensate with higher marketing expenses. Samsung said conditions are likely to remain tough for the second half, as customers look for higher specifications on the one hand and cheaper prices on the other. In order to respond to these desires, the company will for the higher end conduct an early launch of the new Note model while for the low to mid-range, it will look to add new features and push cost effectiveness. 

Revenues for the group decreased to KRW 58.48 trillion in Q2 from 61 trillion the year before. The operating profit rose to KRW 14.87 trillion from 14.07 trillion, a slowdown from the previous quarter, while the net profit remained virtually unchanged, at KRW 11.04 trillion from 11.05 trillion. 

All segments contributed to the sales decline, except at semiconductor unit Device Solutions (DS), where revenues advanced 10 percent, lifted by semiconductor operations up 25 percent and Memory jumping 33 percent. Memory demand for high-density products remained strong amid solid demand from data centres. Shipments went higher for DRAM and NAND while it softened for S.LSI due to weak seasonality. For the second half, Samsung expects solid market conditions for Memory, DRAM and NAND. OLED shipments of flexible panels are expected to boost earnings, though competition will remain fierce for rigid panels. For LCD, earnings will remain weak despite rising demand, due again to stronger competition. 

Revenues were weakest at the IT and Mobile (IM) division, falling 20 percent to KRW 24.0 trillion, with mobile going 22 percent lower to KRW 22.67 trillion. With the lower-than-forecast Galaxy S9 sales, Samsung also citied weak seasonality. Looking towards H2, Samsung expects the business environment to remain tough despite strong seasonality, again, pulled down by growing competition for higher specifications and lower prices. 

At Consumer Electronics (CE), revenues slipped 4 percent to KRW 10.40 trillion. At audio division Harman, revenues dipped 1 percent to KRW 2.13 trillion.