Analysts point to slow smartphone sales as Samsung's operating profit declines

Samsung Electronics today revealed its earnings guidance for the second quarter of 2018, providing an estimation of its sales volume and operating profit for the three-month period ending in June. According to the announcement, sales for Q2 were worth about 58 trillion won (just under $52 billion), which resulted in an operating profit of 14.8 trillion won (about $13.2 billion).

These figures are slightly lower than what the Korean manufacturer reported last quarter when it announced 60 trillion won in sales and an operating profit of 15.6 trillion won. The drop is somewhat expected, as the first quarter contained the launch of its Galaxy S9 flagship, but it's still below analyst expectations, who predicted an operating profit of 15.3 trillion won and around 60.3 trillion won in sales.

Following the news, the company's share price fell by 2.3%, reaching their lowest level in the last five months. Analysts point to a weaker smartphone sales as the reason for the disappointing results, as the company's market share is expected to fall from 21.4 percent to 20.4 percent in the second quarter, as Chinese companies such as Huawei and Xiaomi increase their presence.

On the bright side, its chipset business is still growing strong and mostly canceling out the losses from the smartphone business, and the weak performance of the South Korean won could also end up benefiting the company's results. A potential impending trade war between the United States and China could also give the Korean manufacturer room to present itself as an alternative, as companies in the two countries find it harder to work with each other, according to Jung Sang-jin, fund manager at Korea Investment Management.

Via: Bloomberg, TechSpot

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