Samsung executive says earnings in second-quarter will be poor
Samsung Electronics, the world's largest smartphone maker, expects its second-quarter earnings to be "not that good", said chief financial officer Lee Sang-hoon.
Lee's comments were confirmed by the company after reports in South Korean media. Samsung is expected to post operating profit of 8.4 trillion won (HK$63.8 billion) in the second quarter, according to the average of 35 analyst estimates.
Samsung's earnings have slipped from a record 10.2 trillion won in the third quarter of 2013 as sales of its Galaxy devices are squeezed by Apple iPhones in the high-end market and inexpensive Chinese producers in the budget segment. The firm is introducing new luxury televisions and investing in memory chips to reduce dependence on a telecommunications division that generates more than three-quarters of earnings.
"Strengthening competitiveness of local players in emerging markets are hurting sales of Samsung's lower-end smartphones," Jin Sung-hae, an analyst at KTB Investment & Securities, said in a report after cutting her profit estimate by 10 per cent to 7.99 trillion won.
"The main reason behind the lowered earnings estimate largely stemmed from weak smartphone sales."
Samsung may report preliminary earnings for the second quarter as soon as next week.
Samsung's smartphone shipments fell to 78 million units in the second quarter from 87.5 million units in the previous quarter, according to estimates from IBK Securities.
While Samsung sold about one of every three smartphones globally last year, Chinese competitors gained traction and stalled some of Samsung's annual sales growth. Xiaomi expects its sales to grow fivefold to 100 million phones next year.