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Samsung expected to post another disappointing profit in Q3

Analysts are reporting that Samsung will post lower than expected profits for Q3 2015, due to slimmer margins from its mobile division.

Published onSeptember 21, 2015

Samsung Galaxy S6 Edge+-13

Samsung has remained subdued about its financial outlook this year, but sources and analysts from South Korea are expected that the company may post another quarter that falls below already reduced expectations. The reason is again said to stem from struggling profits in Samsung’s mobile division.

According to an averaged earnings guidance from 22 brokerage houses, Samsung is expected to have generated 6.61 trillion won (US$5.68 billion) as of September 17th. This figure is down 6.4 percent from the month earlier, when the company was estimated to have produced a result closer to 7.06 trillion won.

Overall for the third quarter, Samsung is expected to bring in around 50.17 trillion won in quarterly sales, resulting in a net profit of 5.4 trillion won. If accurate, this would result in more revenue than Q2 2015, but net profits would be slightly lower than earlier in the year. This comes despite the launch of Samsung’s Galaxy Note 5 and S6 Edge+ smartphones, which don’t seem to have helped haul the company back on track.

“Operating profit at Samsung’s mobile business will remain at 2 trillion won, a decrease of 12 percent from earlier expectations,” – Lee Jae-yoon, analyst at Yuanta Securities

Looking particularly at Samsung’s mobile division, the group pulled in a profit of 2.74 trillion won ($2.34 billion) in Q1 and 2.76 trillion won ($2.36 billion) in Q2 2015. Analysts are expecting around 2 trillion won for Q3, which would be a notable decline from the earlier results in the year. Oddly enough, Samsung’s mobile shipment are expected to have increased this quarter.

Some analysts are pinning the problem down to a lack of demand for expensive high-end products, where the margins are better. Instead, Samsung has seen some success in grabbing additional customers at the budget price tiers, but the profits here are much thinner. The company has also seen its market share fall from last year, leaving the company trapped in tight competition with Apple at the high-end and with competitive low cost manufacturers biting into Samsung’s mid-range line-up.

Report: Samsung to focus on profits rather than growth

2015 was expected to be a tough year for Samsung and any return to previous profitability is going to take time. Despite launching some promising high-end products this year, the smartphone market may simply have moved on from the conditions that favoured Samsung just a couple of years ago.

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