Samsung smarting from poor smartphone sales – Q2 profits fall 8pc

The “increase in marketing expenses”, is an allusion to Samsung’s misjudgment of consumer response to its flagship smartphones.

In a more drastic showing, sales in its mobile division plumetted by 38 percent in the April-June period when the new Galaxy S6, launched in April, was met with unexpected lower demand as rival Apple’s iPhone 6 (and other Apple products) dominated the market, according to tapscape.

Samsung said operating profit for its semi-conductor unit surged 80 percent in the second quarter to 3.4 trillion won. Research firm TrendForce last week cut its forecast for 2015 global smartphone shipment growth to 8.2 percent from 11.6 percent, citing a weaker world economic outlook.

It will now be looking to bounce back from this disappointment with the release of several new premium devices, with an event scheduled for August 13 expected to see the revealing of the Galaxy Note 5 and the Galaxy S6 Edge +.

Samsung Electronics has reported an 8 percent year-on-year drop in its net profit, from 6.25 trillion won ($5.4 billion) down to 5.75 trillion won ($4.9 billion). Sales of the flagship pair may seem low but the smartphones are becoming more popular each day.

Samsung’s second-quarter profit missed analysts’ estimates after misfiring on its Galaxy S6 sales strategy and losing ground in emerging markets to Chinese smartphone brands. Operating income from its semiconductor division surpassed the 3 trillion won mark for the first time in several years. Samsung’s memory chip sector played a big role in keeping the company on the right track.

Despite a positive reception, the Galaxy S6 was hit by two problems.

The company’s components division was the one growth area in the quarter, with revenues up to KRW 17.87 trillion from KRW 16.23 trillion a year ago.

Thursday’s conference call made no specific mention of further merger plans, as Samsung’s founding Lee family seeks to boost control over the conglomerate ahead of a generational power transfer.

Mobile engagement is the new customer engagement. Samsung has held the new product launch in September in previous years.