Samsung released its official Q2 2018 earnings results today and results are in line with the guidance that Samsung issued earlier this month. It posted 58.48 trillion won or about $52 billion in revenue compared to 61 trillion won or $54.7 billion in the same period last year, a 4 percent dip.
Samsung’s quarterly operating profit came in at 14.87 trillion won or $13.3 billion which represents a 6 percent increase compared to Q2 2017. Samsung posted an operating profit of 15.64 trillion won or $14.49 billion in Q1 2018. Q2 2018 is thus Samsung’s slowest quarterly profit growth in over a year.
The company puts the decline in revenues on softer sales of smartphones and display panels. Demand for memory chips remained robust. It’s a market that Samsung dominates but that wasn’t enough to prevent revenues from dipping this past quarter. The memory business did make a significant contribution to the higher operating profit.
Amid the sluggish premium smartphone market and intensifying competition, Samsung’s smartphone shipments and revenue declined QoQ due to the slow sales of Galaxy S9 and S9+ as well as the phasing out of older low-end models.
The Company posted a drop in quarterly operating profit due to higher marketing expenses. Meanwhile, the Networks Business saw a healthy sales growth as major overseas carrier partners increased investments in LTE expansion.
Demand for smartphones and tablets is forecast to increase in the second half as the market enters a period of strong seasonality, but competition is seen intensifying as new smartphone models are released. In response, Samsung will seek to expand sales by introducing a new Galaxy Note earlier than usual, which offers exceptional performance for a reasonable price. Also, Samsung plans to strengthen price competitiveness and adopt advanced technology in the mass models.
By business unit, the Semiconductor Business continued to deliver strong earnings, driven by demand for DRAM chips used in data centers and NAND flash memory for high-capacity storage, amid a softening of NAND prices. Samsung solidified its competitive positioning by focusing on value-added products, including 64GB and higher-density server DRAM based on the 1X nanometer technology and 128GB and higher for NAND mobile storage.
In the Display Business, the Company saw weak demand for flexible OLED panels in the second quarter while the shipment and price for LCD panels also fell.
Amid the stagnant high-end smartphone market, the IT & Mobile Communications Division reported a drop in earnings, both year-on-year and quarter-on-quarter, over slow sales of the Galaxy S9. The network business, however, achieved solid growth led by investments in LTE networks by key global customers.
Consolidated Sales and Operating Profit by Segment based on K-IFRS (2016~2018 2Q)
