Samsung’s Profit Dips by Almost Half in Q2 2019

  • The company said it sold 8.3 million smartphones and four million tablets during the second quarter
  • Samsung’s profits from TVs fell YoY due to intensifying competition

Samsung made a net profit of 5.18 trillion won ($4.4 billion) in the April-June period. These profit figures represent a gigantic 53.1 per cent fall in its profit figures in the same quarter last year.

Company’s official statement read, “Samsung Electronics today reported financial results for the second quarter ended June 30, 2019. The Company posted KRW 56.13 trillion in consolidated quarterly revenue and KRW 6.6 trillion in quarterly operating profit. The weakness and price declines in the memory chip market persisted as effects of inventory adjustments by major datacenter customers in the previous quarters continued, despite a limited recovery in demand.”

Operating profit plunged by more than 55 per cent

On total sales of KRW 56.13 trillion, Samsung made a total operating profit of KRW 6.6 trillion. This number not only includes a straight four per cent dip in overall sales but 55.6 per cent dip in the operating profit figures YoY.

Company’s official statment read, “In the second quarter, Samsung Electronics’ capital expenditure stood at KRW 6.2 trillion, including KRW 5.2 trillion spent on semiconductors and KRW 0.5 trillion on displays. Total capital expenditure in the first half was KRW 10.7 trillion, including KRW 8.8 trillion for semiconductors and KRW 0.8 trillion for displays.”

It continued, “The main portion of the Company’s 2019 capex is earmarked for building infrastructure to address demand beyond 2019, and a larger percentage of this year’s investment will be made in the second half.”

Samsung’s consumer electronics division boosted by strong sales

Company’s consumer electronics division, as told by Samsung, was boosted by strong sales of new appliance products and improved profitability of refrigerators and washing machines. The Korea based company also said that profits from TVs fell slightly YoY due to
intensifying competition.

“The Consumer Electronics Division, comprised of the Visual Display and Digital Appliances businesses, recorded KRW 11.07 trillion in consolidated revenue and KRW 0.71 trillion in operating profit for the second quarter of 2019,” read Samsung’s official statement.

It continied, “Earnings for the Visual Display business edged down both QoQ and YoY due to intensifying price competition in the market. However, Samsung’s product-mix improved in the second quarter via early launches of new models and the expansion of premium product sales such as QLED and super-large screen TVs.”

For the digital appliances business, profits grew significantly YoY thanks to improvements in the profitability of key appliances like refrigerators and washing machines. Strong summer demand of air conditioners including Samsung’s Wind-Free Air Conditioner also contributed to robust sales.

Samsung said it will focus on marketing new lifestyle products for consumers, such as Bespoke refrigerators and AirDressers for the rest of the year. The Company will also continue to strengthen the B2B business which includes built-in appliances and system air conditioners.