Samsung predicted poor sales results several weeks ago, and that forecast has transpired with another drop in the company’s quarterly profits.
With sales of the the Samsung flagship Galaxy S6 and S6 Edge unable to mirror the company’s expectations, the seventh quarterly decline in a row was noted. The smartphone element of the business is also struggling against its rivals, such as Xiaomi, with the likely result being a price cut for the smartphone series.
In just a year Samsung has seen its operating profit margin reduced from 15.5 per cent to 10.6 per cent between Q2 2014 and Q2 2015. The company’s net profit fell by 0.5 trillion won to 5.75 trillion won. The mobile phone part of the business recorded a 37.6 per cent decrease in operating profit year-on-year to 2.76 trillion won.
Samsung is being squeezed in both the Western and Asian markets. Xiaomi became China’s largest smartphone manufacturer in 2014, while the release of the Apple iPhone 6 series has reduced Samsung’s market share in the US and Europe.
To add insult to injury, there was a chronic shortage of curved screens, which are used to manufacture the Galaxy S6 Edge. This meant that Samsung was unable to meet customer demand.
The company’s successful semiconductor unit, which supplies a number of other manufacturers including Apple, performed much better. In Q2 2015, profit increased to 3.4 trillion won, up from 1.86 trillion won the previous year.
The general consumer electronics division didn’t fare much better than the mobile phone branch. The rise in the South Korean won, which made it more expensive to export products to Europe and the US, contributed to the decrease in Samsung’s profits from 770 billion won a year ago to 210 billion won last quarter.