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Samsung Electronics post 7.12 bln USD of operating profit in Q2

English.news.cn   2014-07-08 09:44:01

SEOUL, July 8 (Xinhua) -- Samsung Electronics, the world's No.1 maker of smartphones, memory chips and display panels, posted on Tuesday the lowest earnings in two years for the second quarter of this year due to sluggish smartphone sales and the local currency' s ascent to the U.S. dollar.

The preliminary figure for the second-quarter operating profit was 7.2 trillion won (7.12 billion U.S. dollars), down 24.45 percent from a year earlier, according to the regulatory filing. It was a 15.19 percent drop from the previous quarter.

It was the first time that Samsung's operating profit fell below the 8-trillion-won level since the second quarter of 2012 when it recorded 6.46 trillion won in operating profit.

Revenue was 52 trillion won in the second quarter, down 9.5 percent from a year earlier. It was down 3.13 percent from three months earlier, and the lowest in two years.

The company did not unveil its estimates for net profit and a breakdown of each business. The final results will be announced later this month following an external audit.

The earnings result was a shock to the stock market, where Samsung accounts for nearly 30 percent of the total market capitalization. The operating profit was around 1 trillion won lower than analysts' estimates of 8.1 trillion won.

After peaking at 10.16 trillion won in the third quarter of last year, Samsung's operating profit sank to 8.31 trillion won in the fourth quarter of last year and 8.49 trillion won in the first quarter of this year.

Operating margin in the second quarter declined to 13.85 percent from more than 15 percent in the prior quarter.

The lackluster earnings came as sales of smartphones became weaker amid an oversupply of the cutting-edge products in the global market. Samsung depends on smartphone sales for some 60 percent of its total revenue.

Samsung's smartphone sales were estimated to reduce more than 10 percent in the second quarter from a year earlier.

Marketing costs increased as the company sought to sell off smartphone inventory in an aggressive manner in a bid to prepare for the launch of new models in the third quarter, or the period of strong seasonal demand.

The strong South Korean currency also reduced the converted earnings from overseas sales. The local currency appreciated to the U.S. dollar and the euro as well as currencies of emerging economies.

The won/dollar exchange rate fell below the psychologically significant level of 1,020 won, the lowest in around six years, boosting expectations for the rate dropping below the benchmark 1, 000 won mark.

Editor: An
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