Samsung warns of ‘mounting challenges’ in second half

Earlier this month, Samsung had estimated second-quarter sales of about 48 trillion won, with an operating profit of 6.9 trillion won.

The market reacted negatively, with Samsung shares down 2.5 percent in morning trade. The second-quarter results were released before the market opened.

Looking forward, Samsung says it expects demand to increase for its mobile devices, albeit at a slowing rate of growth.

Profit declined by eight per cent to 5.75 trillion won (£3.2 billion), the fifth successive quarterly fall in profits for the company.

The company expects things to improve in the near future, spurred by the imminent launch of the Galaxy Note 5, and Samsung said during the earnings call that it has a big-screen smartphone up its sleeve.

Semiconductors, in particular, saw operating profit surge in the second quarter by 83% from a year earlier to 3.4 trillion won.

Samsung led the market with a 21.7 percent market share, even though sales dipped from a year earlier and its market share was below the 24.8 percent in the same period a year ago. But the launch has failed to revive the company’s weak sales performance.

And that depends on how Samsung’s new products sell. It’s yet another quarter of shrinking profits which fell 8 per cent year-on-year, forcing the company to accede that sales of Galaxy S6 phones had been “quite marginal”.

Samsung, which had projected record sales for the S6, started manufacturing curved screens at a third factory about two months earlier than planned to meet demand for the Edge.

At the high end, it has lost significant ground to Apple, which dominates with its iPhone line.

Samsung is slashing the price of Samsung Galaxy S6 and the S6 Edge as mobile phone sales decline, tech magazine Wired reported on Thursday. The invitation poster for the showcase event slated for August. 13 in New York also implied the model’s release.

As Bloomberg points out, one reason its latest phones didn’t perform particularly well despite critical acclaim and heavy marketing is that the company misread customer demand. However, net income rose 25 percent from 4.52 trillion won in the preceding first quarter.