Samsung’s run of record profits fizzles out
Samsung’s year-long streak of record quarterly earnings has come to an end.
The world’s largest smartphone maker said Friday that operating profit for the quarter ended in June is expected to come in at 14.8 trillion won ($13.2 billion), down from the previous quarter’s 15.6 trillion won ($14 billion).
For four quarters in a row, Samsung had posted ever higher profits.
Its forecast for the second quarter is still an increase of 5% from the same period a year earlier, but it fell short of analysts’ expectations.
Shares in Samsung Electronics dropped about 2% in Friday afternoon trading in Seoul.
Samsung’s profits are suffering from disappointing phone sales and slowing demand for some memory chips, according to analysts.
The company didn’t break out the performances of its different businesses in its forecast Friday. It will report full results at the end of this month.
Consumers’ reluctance to spend a lot of money to upgrade their phones has affected sales of Samsung’s new flagship device, the Galaxy S9. Market research firm Counterpoint Research expects Samsung will struggle to sell 40 million Galaxy S9 phones this year. That’s a steep decline from the record 50 million Galaxy S7 phones Samsung sold two years ago.
Samsung reaped the benefits of robust demand for chips used in electronic devices in recent years, but now it’s suffering from weak demand and a sharp price drop for some memory chips.
Some analysts predict Samsung’s profits will bounce back in the second half of the year.
“Despite concerns on smartphones, we expect earnings for its mobile business to recover … thanks to new model launches,” analysts from Daiwa Capital Markets wrote in a note to clients last week.