Samsung Electronics is a key subsidiary of Samsung Group, a South Korean multinational conglomerate company headquartered in Samsung Town, Seoul. It is the largest South Korean chaebol. Other key subsidiaries include Samsung Heavy Industries, Samsung Engineering and Samsung C&T.
Samsung signals 25pc drop in operating profit
Guidance for quarter to June cites pressures on smartphone business and a stronger won
Reuters in Seoul
Samsung Electronics yesterday said its operating profit likely fell 24.5 per cent in April-June, the lowest in two years, owing to slowing growth in the South Korean company's cash-cow smartphone business and the strength of the won.
Profits have fallen at the world's largest smartphone maker as competition heats up from Chinese makers of low-priced yet feature-heavy handsets, as market growth shifts to low-end phones in emerging economies.
Samsung said operating profit likely fell to 7.2 trillion won (HK$55.1 million) during the quarter. That compared with an 8.3 trillion won mean estimate of analysts polled by Thomson Reuters.
The result, released before the final second-quarter figures due near the end of this month, would be the lowest since it posted a 6.5 trillion won profit in the second quarter of 2012.
In a separate statement, Samsung said the won's strength during the second quarter and a slowdown in overall smartphone market growth hurt the company's bottom line.
"The company cautiously expects a more positive outlook in the third quarter with the coming release of its new smartphone line-up," Samsung said, adding that it expected stronger smartphone sales as well as a seasonal lift in demand for its memory business.
Nevertheless, analysts say the streak of year-on-year profit decline could extend into the third quarter, with Apple widely expected to launch a successor to the iPhone 5.
CIMB analyst Lee Do-hoon said the company appeared to be taking longer to address challenges it is facing in the mid-to-low end of the market. "Samsung has been talking about strengthening its mid-to-low tier line-up but we found that this has not happened yet," he said
The prior year's record profit of 10.2 trillion won could also be difficult to beat.
Samsung also said second-quarter sales likely fell 9.5 per cent to 52 trillion won.
That falls short of analysts' estimate of 54 trillion won and would be the first annual decline since Samsung adopted new accounting standards in 2009.