Slow Sales of Galaxy S9 Hits Samsung’s Q2 Report


Samsung sees 40 per cent of its revenue from mobile business & poor Galaxy S9 sales brought 2.7 trillion Korean Won in this quarter, a loss of 34 per cent

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South-Korean electronics giant, Samsung released its second-quarter report of the current fiscal year of 2018-19 on Tuesday, and the results show that sluggish sales of the company’s much-hyped Galaxy S9 have majorly contributed to the firm’s 4 per cent decline of year-on-year (YoY) revenue to 58.5 trillion Korean Won.

Mobile business caused 34 per cent loss in operating profit

The electronics giant stated that the company saw the fastest decline in the operating profit of its mobile business, which dropped by 34 per cent in comparison to the corresponding quarter in the previous fiscal year of 2017-18. Revenue for the mobile business stood at 2.7 trillion Korean Won – the company’s biggest drop since the launch of its another flagship model, Galaxy S7 last year.

This has caused a worry among Samsung’s investors regarding a possibility of a quick turnaround in the mobile business. Park Jung-hoon, a fund manager at HDC Asset Management that owns Samsung shares, said, “Samsung was already lost to China in price competition and is getting threatened by Chinese models in designs and hardware strength.”

He added, “It is not an easy game for Samsung unless it really meets consumers’ needs for new smartphones.”

Even before the release of the Q2 report, analysts had predicted that Galaxy S9 will contribute to worst sales since the release of Galaxy S3 in 2012. They had predicted that the smartphone will only see approximately 31 million shipments, since launching in March 2018.

The South-Korean electronics giant said that higher marketing expenses, stiff competition in the mobile phone market and gradual elimination of lower-end models of the phone, catered to such a decline in the company’s quarterly revenue.

TV and chip business offset mobile business loss for Samsung

The company thanked the FIFA World Cup – the biggest sporting event in the world, for the growth in its TV business by giving the same a boost in sales.

Samsung also thanked its chip business for helping the company see a profit. The chip business saw 11.6 trillion Korean Won operating profit in the second quarter of the current fiscal, which is a 45 per cent increase from the same quarter a year ago.

With a plan to recover the loss, Samsung has announced to introduce a new Galaxy Note earlier than the usual time when it releases new mobile phones. Additionally, it will also release a launch-date for its next-generation Galaxy Note model. The firm said that it will work towards competitive pricing and quick adoption of future technology while manufacturing its future smartphones.