Q3 2019 Earnings Report: See how major smartphone OEMs are performing

Q3 2019 Earnings Report: See how major smartphone OEMs are performing

Smartphones are essential drivers of innovation in today’s world. But at the end of the day, smartphones are still business, and OEMs innovate in this field to make money. Smartphone OEMs like Google, Samsung, Huawei, LG, and Sony have posted their Earnings Reports for Q3 2019, giving us insight on how profitably and comfortably the companies stand in the smartphone business. Other OEMs like Xiaomi and Realme have also witnessed good growth, according to separate reports.

Samsung

Starting off with the most prolific Android OEM over the years, Samsung’s IT and Mobile Communications Business posted consolidated revenue of KRW 29.25 trillion ($25 billion) and operating profit of KRW 2.92 trillion ($2.5 billion) for Q3 2019. These figures are impressive as revenue for Q3 2018 was KRW 24.91 trillion ($21.3 billion) while operating profits last year were at KRW 2.22 trillion ($1.9 billion), indicating a good 31% increase in profits. This improvement in earnings were thanks to robust shipments of the Samsung Galaxy Note 10, a better product mix and higher profitability in the mass-market segment. The Galaxy Note 10 specifically exceeded the performance of the Note 9, presenting double-digit growth in volume. Samsung also reduced its costs by completing the A-series lineup transition, which further improved profitability.

Other contributors to the good quarterly results were the expansion of its 5G smartphone lineup, the launch of the Galaxy Fold which represented the launch of a new form factor,

For the fourth quarter, Samsung expects mobile demands to decline YoY because of seasonal effects and “global economic uncertainties”. Still, mass-market smartphones like the A-series are expected to maintain their solid sales momentum. Profitability will be taking a dip though, as marketing costs are expected to increase for the next quarter. For 2020, Samsung forecasts increased consumer demand for 5G devices, while foldable products will also see new additions.

Alphabet/Google

Google’s parent company Alphabet announced revenues of $40.5 billion for Q3 2019, up 20% from the $33.7 billion reported for Q3 2018. Operating income for the parent company is $9.17 billion, up 23% from $8.62 billion last year, while net income stood at $7.06 billion, which is 30% lower from the $9.19 billion from last year.

I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube and Cloud. We’re focused on providing the most helpful services to our users and partners, and we see many opportunities ahead.

Sundar Pichai, CEO, Google

Huawei

Huawei’s Q3 2019 business report does not contain as many figures, so we need to rely on other reports to figure out how the company is performing. According to Counterpoint Research’s latest report pertaining only to the Chinese market, Huawei sold 41.5 million smartphones in Q3 2019 in China alone, representing a whopping 63% YoY growth from the 25.5 million units sold last year in the same quarter. All other major smartphone players in China ended up with lower sales, indicating the confidence the Chinese market has in Huawei.

According to Canalys’s report with respect to the global smartphone market, Huawei’s growth momentum in China was echoed on the global level too, despite the trade ban. Huawei shipped 66.8 million smartphones in Q3 2019, a 29% growth over the 51.9 million smartphones shipped in Q2 2018.

The trade ban has a lot of repercussions for Huawei globally, but at least in its home market, the company continues to reign supreme. One can only wonder how everyone else’s financial results would look like if Huawei had been allowed to march forward without any impediments.

LG

LG recorded “record-breaking” third quarter revenues and operating profit, but those pertain to the entire gamut of LG’s business. On the mobile front, LG reported sales of KRW 1.52 trillion ($1.27 Billion), and an operating loss of KRW 161.2 billion ($135 million). The operating loss actually has come down YoY because of production efficiencies and cost improvements.

To provide some scale, LG’s smartphone division’s total revenues are lower than Samsung’s smartphone divisions’s operating profits.

Sony

Sony’s mobile division is struggling, which is a fact that does not surprise a lot of people. The mobile division posted operating revenue of JPY 78 billion ($719 Million) for Q3 2019, down from Q3 2018’s JPY 115 billion ($1.06 billion). We were unable to spot the figures for operating profit/loss for the mobile division by itself, but it’s everyone’s guess that the picture will not be rosy.

Xiaomi

We can adjudge Xiaomi’s performance thanks to Counterpoint Research’s latest report on the Indian market. While of course, this does not compare to the business earnings reports that we presented for other smartphone OEMs, it does give a fair idea of the position of the company in one of its key markets.

Xiaomi managed to record its highest ever shipments in Q3 2019 in terms of numbers, even though it’s market share came down YoY. This is because India as a market witnessed an expansion of 10% YoY. Xiaomi ended up selling more than 8.5 million smartphones in the Diwali sale period in India itself, with mass-market devices like the Redmi 7A, Redmi Note 7 Pro and Redmi Note 7S being the best performing smartphones for the brand in the context of sales.

Realme

If you see Xiaomi’s share in the Indian market declining, credit for the same goes to Realme as it continued to eat into Xiaomi’s business. Realme’s share in the Indian market grew from just 3% in Q3 2018 to 16% in Q3 2019, coming in at the cost of dipping shares of Samsung and other smaller players.

According to a separate report from Counterpoint, Realme has registered over 800% growth YoY in the global smartphone market, jumping from the 47th spot in Q3 2018 to becoming the 7th largest brand in terms of global shipment in Q3 2019. India and Indonesia form the most important markets for Realme as they contribute to more than 80% of its global shipments. The brand has expanded rapidly across more than 20 countries, and is looking to expand further in other South East Asian markets.


Sources: Samsung Newsroom, Alphabet, Huawei Press, Counterpoint Research [(1), (2), (3)], Canalys Newsroom, LG Newsroom, Sony Investor Relations

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