Samsung has reported its earnings for Q2 2019 that ended June 30 2019, in which the company has made operating profit of 6.60 trillion won, down 55.6% YoY, as expected. This due to weakness and price declines in the memory chip market and inventory adjustments by major datacenter customers, similar to previous quarters, despite a limited recovery in demand, said Samsung. It reported revenue of 56.13 trillion won, down 4% YoY from 58.48 trillion won last year.
IM sector that includes Mobile Communications and Networks Businesses posted 25.86 trillion won consolidated revenue, up 7.74% YoY and 1.56 trillion won operating profit for the quarter, down 41.5% compared to 2.67 trillion won in the same quarter last year.
Samsung’s smartphone shipments increased QoQ led by strong sales of the new Galaxy A Series, including the Galaxy A50 and A70, while the overall market saw demand for smartphones decline due to the negative macroeconomic environment and seasonal weakness. However, sales of flagship models fell QoQ on weak sales momentum for the Galaxy S10 and stagnant demand for premium products.
“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,” said Samsung.
Earnings for the Networks Business improved due to expansion of commercial 5G service in South Korea and LTE networks in overseas markets. In the second half of 2019, the company aims to solidify foundation in the global 5G market based on its leadership in 5G commercialization in the US and Korea.
In the second half, the overall mobile market demand is expected to remain weak due to growing uncertainties over the global economy and trade believes Samsung. The company will continue to strengthen its flagship lineup and increase sales of new mass market models. It added that it will promptly respond to the changing business environment, and step up efforts to secure profitability by enhancing efficiency across development, manufacturing and marketing operations.
In the third quarter, Samsung will focus on the Galaxy Note 10 and Galaxy Fold and also strive to improve profitability by increasing operational efficiency. It will introduce more competitive A series models in the second half to extend the ongoing positive momentum in mass market smartphone sales.