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Samsung’s mobile profits up amid overall revenue decline in Q2

Jasper Hart
July 30, 2020

Reduction in marketing expenses offset decreased device sales

Samsung’s mobile business saw profitability gains in Q2 2020 despite a decrease in smartphone sales.

Operating profit for Samsung’s IT and Mobile Communications units stood at KRW 1.95 trillion (£1.25 billion), an increase on Q2 2019‘s KRW1.56 trillion (£1.0 billion). However, revenue was down from KRW24.7 trillion (£15.8 billion) to 20.75 trillion (£13.3 billion) in the same period.

The manufacturer put the results down to successful cost-optimisation efforts including the reduction of marketing expenses and offline promotions.

“Amid lockdowns in regions including North America and Europe and store closures due to the global impact of COVID-19, overall market demand decreased QoQ and the Company’s smartphone shipment and revenue declined from the previous quarter,” Samsung said in a statement announcing its results.

“However, efficient cost management, including reductions of marketing expenses and offline promotions, helped the Company report solid profits.”

Samsung expects a quarter-on-quarter increase in smartphone sales due to the release of a new Galaxy Note model and a new foldable phone, that will be introduced at a Galaxy Unpacked event on August 5.

It added that its investments in 5G networks both domestic and international were delayed due to Covid-induced uncertainty.

Group performance

At a group level, Samsung reported KRW 52.97 trillion (£34.0 billion) in revenue and KRW 8.15 trillion (£5.23 billion) in operating profit for the quarter. The revenue figured constituted a decline on Q2 2019’s KRW56.13 trillion (£36.0 billion), while operating profit was an annual increase from KRW6.60 trillion (£4.23 billion).

Operating profit gains came from memory chip and appliance demand, as well as display panel business gains.

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