Customers check out Samsung products at the company's retail shop in Seocho-dong, southern Seoul, on Tuesday. Yonhap
Samsung Electronics on Tuesday estimated second-quarter profits would reach 6.9 trillion won ($6.1 billion), continuing their upward trend after its operating income plunged in the third quarter of last year.
Samsung’s profits fell 4.03 percent in the three months ending June compared to a year earlier, but the figure was up 15.38 percent from the previous quarter this year, the Korean tech giant said in a regulatory filing.
Sales were 48 trillion won in the quarter, a slight 1.87 percent increase from the first quarter.
Samsung suffered its worst profit drop in the third quarter last year, with its profits falling below the 5 trillion won range for the first time in three years. But the figure has been rebounding this year.
The latest profits, however, missed the 7.2 trillion won average of analyst estimates largely due to weaker than expected Galaxy S6 sales.
Despite the earlier positive market reaction upon its debut in April, the new flagship smartphone has fallen short of luring customers from Apple’s iPhone and cheaper devices made by Chinese handset makers.
Production constraints for its Edge variant with a curved display have led to shortages, trimming sales of the device further.
“Despite the market’s initial response toward the Galaxy S6 not being bad, a bottleneck in the supply of the Edge product can be recognized as one of the reasons for the weak earnings,” said Lee Ka-keun, an analyst at KB Securities.
Samsung didn’t release net income or details of division earnings on Tuesday. Audited results will be announced later this month.
Analysts predicted profits across business divisions to be 3.5 trillion won in semiconductors, 500 billion won in displays, 3.1 trillion won in mobile phones and 250 billion won in consumer electronics.
“Except the mobile business division, other business divisions are expected to meet estimates,” Lee said.
For the third-quarter earnings, analysts are paying keen attention to the company’s chip business division, which supplies memory and processor chips to Apple and other device makers.
“The company’s chip division earnings are improving with stronger demand for its Exynos high-end smartphone application processors chip,” Morgan Stanley said in a recent report.
“Orders from external customers are expected to pick up in the second half.”
Samsung is also said to be making the main chip in the next iPhone model.
“The chip business will continue to gain ground, as Samsung is set to begin the production of the third-generation 3-D vertical NAND flash memory,” said Yoo Jong-woo, an analyst at Korea Investment & Securities.
By Lee Ji-yoon (
jylee@heraldcorp.com)