22 October 2016
Samsung benefited from sluggish sales of Apple’s iPhone 6S models as US wireless carriers promoted its S7 phones. Photo: Bloomberg
Samsung benefited from sluggish sales of Apple’s iPhone 6S models as US wireless carriers promoted its S7 phones. Photo: Bloomberg

Samsung profit beats estimates on Galaxy S7 sales, cost cuts

Samsung Electronics Co. reported second-quarter profit that beat analysts’ estimates, fueled by stronger sales for Galaxy S7 smartphones and aggressive cost cuts, Bloomberg reports.

Net income, excluding minority interests, was 5.83 trillion won (US$5.1 billion) in the April to June period, the Suwon, South Korea-based company said in a filing on Thursday. That compares with the 5.64 trillion won average of estimates compiled by Bloomberg.

The company also announced a 1.79 trillion won share buyback.

Samsung was the biggest beneficiary of sluggish sales of Apple Inc.’s iPhone 6S models, as US wireless carriers promoted S7 phones, helping to reduce Samsung’s own marketing expenses.

Price declines of semiconductors and displays also helped sales of the company’s other consumer electronics, even amid sluggish economic growth across the globe.

The company said it anticipates higher marketing spending in the second half, and an uptick in capital expenditure in plants and equipment.

“The smartphone and TV divisions led the earnings surprise for the quarter,” said Greg Roh, an analyst at HMC Investment Securities in Seoul.

“Samsung did well in the first half, but it’s the matter of how well it could defend itself from the overall downside risks in the second half.”

The company’s stock has gained more than 20 percent this year after three straight annual declines.

“Looking ahead to the second half of 2016, the company expects its solid performance to continue compared to the first half, mainly driven by earnings increase in the component business due to sales growth in high value-added products and stable demand and supply conditions,” Samsung said in a statement.

Samsung will unveil its next-generation Note device with larger displays on Aug. 2 in New York, Brazil and in London, the company said.

Revenue was 50.9 trillion won in the quarter, slightly higher than the 50 trillion won of its July 7 preliminary earnings announcement.

Sustained profit gains from the company’s cheaper smartphones, such as the J series, also helped to boost mobile earnings. Operating profit at the mobile unit rose to 4.32 trillion won from 2.76 trillion won.

Operating income at the chip unit was 2.64 trillion won, compared with 3.40 trillion won a year earlier, as weaker demand pressured component prices.

Sluggish sales of personal computers and global smartphones weighed on the prices of memory chips, with a slide in average selling prices of dynamic random access chips.

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