It’s that time of the year, when companies are filing their financial reports for the second quarter of the year. Following on from LG, Samsung is the next company in line to release its revenue and sales figures, so we can finally see how the launch of the Galaxy S4 has helped, or hindered, Samsung’s bottom line.
Across the company, quarter on quarter sales are up, with the consumer electronics department leading the way, followed by IT and mobile communications, then display panels, and finally a small growth in Samsung’s semiconductor division. This across the board growth generated a net profit of 7.77 trillion won ($6.96 billion).
Looking at the part that interests us most, Samsung’s mobile sector, sales were up 9 percent compared with the first quarter of the year, and grew 54 percent from the second quarter of 2012.
That’s clearly a very impressive figure, but as we’ve seen across the wider mobile market lately, this increase in sales hasn’t managed to translate into profit. Despite growing 8 percent over the last quarter, Samsung’s mobile division operating profit shrank by 3 percent over the same period, suggesting that revenue levels are starting to plateau.
This marginal profit is likely to have declined due to increased costs associated with launching a new products, R&D costs, such as marketing, and other retail channels investments. This all matches up with what we’ve seen in the wider industry, with company’s being forced to spend more on marketing and struggling to keep profit levels up in the face of strong competition.
Samsung also noted an interesting trend with its tablet products, demand is decreasing in saturated developed markets but increasing in emerging markets. Looking at the remainder of the year, Samsung expects growth to continue in emerging markets, including China, due largely to high demand for mass-market smartphones. In more developed markets, the company expects future growth to be led by LTE enabled products, as consumers phase out their existing handsets to make use of faster download speeds.
Overall it’s a good result for a company which has been struggling with a lack of investor confidence. But it remains to be seen whether stagnant smartphone revenues are to become the norm, or if it’s just a blip on an otherwise upward trend.
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Saumsung smartphone are among the most expensive. And their margin in smartphone are struggling? Well, stop wasting money in silly ads and developing your own silly branch of Android. Stop making a millions of different smartphone models. If all of this is too hard, then just give up this sector. There are other smartphone manufacturers who will be glad to fill the gap.
why should they give up when 60-70% of their money comes from mobile??
Because apparently (according to the article) the mobile sector is not profitable to Samsung inspite of the exhorbitant prices of ther smartphones. Should Samsung rather spend its energy in the 30-40% remaining activities?
AGain .. can’t you even read? IT says that it is profitable. Just the the GROWTH of profit has slowed … which is not unexpected in such a saturated market. And really, for consumer, I couldn’t care less, as long as they still offer choices and keep the other manufacturer on their toes.
who said the smartphones are not profitable are you joking?? lols. they earn most of their money from this division lol. samsung has overtaken apple too last quarter as the most profitable phone company http://www.guardian.co.uk/technology/2013/jul/26/samsung-apple-profitable-mobile-phone
Now while I wish the smartphones are cheaper too, it is rubbish to say that Samsung phone are the most expensive. In fact, if you go by cost vs price, its material cost is much higher than iphone 5 ($236 vs $199/207) ….
And stop making different smart phone model? Darn, I never expect to hear this in an android forum, for that is so typical of iFruity brainless fan. Android is all about choices and you FAULT a manufacturer for offering choices? Blood stupid.
Btw, say that you will but 6.28 trillion won is hardly struggling.
Calm mate, I am an Android person not at all an iFan. The title says “smartphone profits are struggling”. So is it true or not? BTW, do you really know how many models of Samsung smartphones are there in the world? It’s none of my business of course, except the innocent users who got stuck with models using Samsung Bada OS or some slightly old models (like T589) that have no value now. In reality I don’t care what happening to Samsung. I don’t know if “struggling” was the article author interpretation or from Samsung CFO. I just meant, if it find the mobile market struggling, then just leave it instead of complaining.
smartphone profits are struggling
Did not know Samsung was complaining. Thanks for your insight and added context for this article.
Sure.. Samsung will listen to you and completely give up its mobile business!
Sure your credentials are way above and beyond that of the actual smart people doing the thinking and making a wannabe company (12 years) back into the one of the most profitable in the world now!
And your opinion of reducing number of choices is the most valued! Telling a company to do exactly the opposite of what made it to topple Nokia and become the largest phone manufacturer in the world!
Thank God it is only in this site that your opinions are allowed to be printed! :-P
they topped net profits for tech companies last quarter despite spending gazilliions on ads
struggling????? what where is srtuggling???????