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Samsung’s mobile profits decrease in Q2 despite sales increase

Jasper Hart
July 31, 2019

Company’s wider sales decreases due to US-China and Korea-Japan tension

Samsung’s mobile division saw an increase in profits in the second quarter of 2019, despite seeing an overall year-on-year downturn.

In its earnings report for Q2 2019, The Korean conglomerate’s mobile division saw sales of KRW24.7 trillion (£17.16 billion), a year-on-year increase of eight per cent on the 22.67 trillion (£15.8 billion) posted in the same period last year. However, this was a quarter-on-quarter decrease of six per cent on the KRW25.92 trillion (£18.02 billion) it saw in Q1 of this year.

However, the consolidated IT & Mobile Communications division saw a year-on-year decline in operating profit from KRW2.67 trillion (£1.87 billion) to KRW1.56 trillion (£1.08 billion).

Samsung cited strong sales of its Galaxy A Series phones, but “weak sales momentum” for its Galaxy S10 and “stagnant demands for premium products” as reasons behind the performance.

In a statement, the company said: “Increased costs associated with growing competition in the mid- to low- end segment and inventory adjustments of older models resulted in a drop in profit for the Mobile Business. On the other hand, earnings for the Networks Business improved thanks to the expansion of commercial 5G service in South Korea and LTE networks in overseas markets”.

The company’s aims for the second half of the year are to focus on the launches of the Galaxy Note 10 and the delayed Galaxy Fold, as well as the introduction of more competitive A Series models.

In wider company news, Samsung saw an operating profit of KRW6.60 trillion (£4.6 billion), a year-on-year drop of 56 per cent from the KRW14.87 trillion in the same quarter last year. This reflects a broader industry decline due partly to the US-China trade war, and also a trade row between South Korea and Japan.

“The Company is facing challenges from uncertainties not only in business areas but also from changes in the global macroeconomic environment,” it said.

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