Galaxy S7 drives up Samsung’s Q2 profit

[THE INVESTOR] Samsung Electronics said July 28 that its operating profit increased 18 percent on-year to 8.14 trillion won (US$7.19 billion) in the April-June period on the back of strong sales of the firm’s smartphones, the Galaxy S7 and its Edge variant in particular.

Quarterly revenue increased 5 percent to 50.94 trillion won from a year earlier. 

Samsung’s IT & Mobile Communications division, in charge of the smartphone business, posted a whopping 4.32 trillion won operating profit, up from 2.76 trillion won in the second quarter last year, accounting for 53 percent of the company’s entire operating profit.

The upbeat performance was largely driven by strong sales of the Korean tech giant’s flagship smartphone Galaxy S7 and its Edge variant, the company said.

The consumer electronics division for home appliances posted 1.3 trillion won in operating profit, up from 0.21 trillion won in the second quarter last year.

Premium products, such as SUHD TVs, the Chef Collection refrigerator, and the AddWash washer, contributed to the profit improvement, according to Samsung. The firm’s component businesses, however, suffered a profit decrease from a year earlier.

Samsung’s semiconductor segment saw its operating income drop 22.3 percent on-year to 2.64 trillion won while the display business’s operating profit dipped by 74 percent to 140 billion won

A prolonged price drop in the global DRAM market is said to have undermined Samsung’s profit in the chip business.

Despite the improved production yields of liquid-crystal displays, the Korean tech firm suffered from the price decrease of displays in the global market due to supply glut.

The company anticipated improved demand and supply conditions will boost the component businesses.

“Marketing expenditure for the IM business will increase mainly due to a new flagship product (the Galaxy Note 7) launch and fierce competition in the industry,” Samsung said.

Samsung said its capital expenditure this year, an indicator of how much a company spend to beef up infrastructure, will slightly increase compared to last year and it will mainly focus on smartphone OLED displays and vertical NAND flash memory chips, both of which have saw an increasing demand recently.

Samsung is expected to supply OLED displays and V-NAND memory chips for Apple’s next iPhones.

By Kim Young-won (wone0102@heraldcorp.com)