Poor Galaxy S9 sales may have ended Samsung’s record profit run
Samsung Electronics has announced its earnings guidance of Q2 2018. The company reported consolidated sales of approximately 58 trillion won ($51.8 billion), with consolidated operating profit of approximately 14.8 trillion won ($13.2 billion).
For the past four quarters, Samsung Electronics has reported record profits. The company has experienced success with selling DRAM, NAND, OLED displays, and more. The IT & Mobile Communications division has flourished for the last two years. The Samsung Galaxy S7, released in 2016, was a bestseller as it reportedly sold a total of 50 million units. Last year’s Samsung Galaxy S8 reportedly did not sell as well as the Galaxy S7, and revenue from the mobile division declined in Q3 2017. However, Samsung Electronics posted record profits on account of profitable results posted by other divisions of the company.
However, the earnings guidance shows that Samsung’s continued run of record profits for four quarters in a row has come to an end. The consolidated sales and operating profit figures represent a 0.7 percent decline in sales year-over-year, as Samsung reported sales of 61 trillion won ($54.57 billion) last year. In terms of profit, the figure represents an 11 percent increase in profit year-over-year, as Q2 2017’s reported profit was 14.07 trillion won ($12.58 billion). This comes in contrast to Q1 2018, when Samsung reported profit of 15.64 trillion won ($14.65 billion) from revenue of 60.56 trillion won ($56.2 billion) — its best result yet.
According to analysts, poor sales of the Samsung Galaxy S9 have contributed to a decline in Samsung’s bottom line in Q2. The phone has reportedly sold the lowest of any flagship Samsung phone since the Samsung Galaxy S III, and expected shipments of the phone this year are 31 million.
Samsung will unveil the Samsung Galaxy Note 9 on August 9th, and it remains to be seen how the company’s latest Note series flagship will affect Samsung’s bottom line. With respect to OLED displays, analysts believe Samsung’s AMOLED displays could be lower than previously expected as Apple is reportedly expecting a 6.1-inch LCD iPhone to take up a higher proportion of sales in its lineup this year, along with reportedly bringing LG Display as an alternative supplier of OLED displays. This could limit Samsung’s profits from OLED displays.
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