1. Samsung cautious on outlook as smartphone market growth slows

Samsung cautious on outlook as smartphone market growth slows

Samsung's dominance is being chipped away at the low-to-mid end by Chinese rivals such as Huawei Technologies Co Ltd and in the premium segment by Apple

By: | Seoul | Published: July 30, 2015 1:01 PM
Samsung

Samsung’s dominance is being chipped away at the low-to-mid end by Chinese rivals such as Huawei Technologies Co Ltd and in the premium segment by Apple. (AP)

Samsung Electronics Co Ltd on Thursday offered a downbeat outlook for the second half of the year as smartphone market growth slows and ahead of the expected release of new iPhones from arch rival Apple Inc.

The firm also reported a 4 percent fall in second-quarter profit and ruled out a “special dividend” similar to a big year-end payout for 2014. That disappointed investors, pushing its stock lower as pressure grows on Korean firms to return more capital to shareholders.

Samsung’s dominance is being chipped away at the low-to-mid end by Chinese rivals such as Huawei Technologies Co Ltd and in the premium segment by Apple, while some markets show signs of saturation. Researcher TrendForce last week cut its 2015 global smartphone market growth forecast to 8.2 percent from 11.6 percent earlier.

Samsung remained the top smartphone maker in April-June, but shipments fell in part due to an inability to build enough curved-screen Galaxy S6 edge handsets, analysts said. The firm said its mobile division will launch new larger-screen phones in the third quarter but may not be able to improve earnings.

“I don’t think there’s much to expect from Samsung in the third quarter,” said fund manager Park Jung-hoon at HDC Asset Management.

Second-quarter profit was 6.9 trillion won, matching the company’s estimate issued earlier this month.

“While 2H 2015 is expected to present mounting challenges, the company will try to improve earnings,” Samsung said on Thursday.

Samsung’s mobile business booked a 38 percent decline in April-June operating profit at 2.76 trillion won. It expects smartphone shipments to rise in the third quarter from the second, but said average selling prices could fall due to price adjustments for S6 models aimed at boosting sales.

The firm has brought forward the launch of its latest Galaxy Note phone to August from September, while a person familiar with the matter told Reuters that it plans a larger version of the S6 edge. But new iPhones in September would limit Samsung’s third-quarter sales growth, analysts said.

On the bright side, Samsung’s chips division reported profit of 3.40 trillion won, its highest since the third quarter of 2010, due to demand for memory chips and sales growth in mobile processors.

Samsung doubled its interim dividend, but did not comment on potential stock buybacks and hinted that it would not repeat 2014’s “special increase”.

Investors hoped the company, faced with limited earnings upside in the near term, would use its 61.8 trillion won cash and equivalents to boost the stock price.

Samsung shares were down 3.5 percent as of 0426 GMT, near their lowest since November 2014. The benchmark index was down 0.5 percent.

  1. D
    Dineshbhai Raychandbhai Parmar
    Dec 2, 2017 at 7:38 pm
    I message in 500000. rup.
    Reply

    Go to Top