As consumer demand for new televisions dry up, Samsung endured a record drop in profits for the second quarter running, despite their meteoric smartphone sales.
For the quarter, the world’s largest manufacturer of TVs and flat screen panels faced an 18 per cent drop as consumer demand for computers, televisions, flat screens and semiconductors continue to wither. This time last year the company recorded 4.28 trillion won (AU$3.7 billion) in net income compared to their recent quarter performance of 3.51 trillion.
With flat panels and televisions accounting for roughly half the company’s overall revenue, Samsung project the slump in TV and display sales will continue into the third quarter, as economic recovery diminishes consumer appetite for home electronics.
“If the macro economy continues to worsen in August and September, there will be no end in sight to this downturn” said Kim Chang Yeul, a Seoul-based analyst at Mirae Asset Securities Co. “It’ll turn around at some point, but right now, nobody can say confidently when that’ll happen.”
The company’s prominent mobile phone positioning helped cushion the financial blow, but it was not enough to compensate for their harsh quarter. The world number two smartphone maker more than doubled its telecoms department operating profit, from 630 billion won to 1.67 trillion won, owed to the strong sales of its flagship Galaxy range.
The Galaxy S II has sold more than 5 million units since its launch, reaching the milestone 40 days quicker than its predecessor.
Samsung’s total operating profit fell by 25 per cent to 3.75 trillion won, which matched the company’s estimate. Despite its slump in growth, Samsung remains the world’s biggest technology firm based on its revenue.