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.
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.