Jul 31, 2015

    Galaxy S6 phones fail to reverse Samsung's fortunes


    SOUTH Korean giant Samsung Electronics posted an 8 per cent fall in second-quarter net profit yesterday and promised "flexible" pricing of its new flagship smartphone, after less than stellar sales contributed to a slump in its mobile unit's earnings.

    The world's largest smartphone-maker said net profit for the April-June period was 5.75 trillion won (S$6.75 billion), down from 6.25 trillion won a year ago.

    The conglomerate has now seen its net profit decline for five straight quarters year-on-year. Samsung has faced a double challenge from United States arch-rival Apple in the high-end smartphone market and rising Chinese firms like Xiaomi in the mid- and low-end market.

    Hopes of a turnaround had largely been pinned on the sixth edition of its flagship smartphone, launched in April. The Galaxy S6 and S6 Edge with a wraparound screen received rave reviews but sales fell short of expectations, partly due to production and supply constraints.

    Operating profit in the mobile division was down 38 per cent year-on-year in the second quarter.

    The second half of this year would continue to pose "mounting challenges", the firm said in its regulatory filing, with smartphone demand predicted to increase at a lower rate.

    "We will strive to maintain solid sales of high-end smartphones by flexibly adjusting S6 and Edge prices depending on marketing circumstances, while also launching new large-display models," said Park Jin Young, vice-head of communications at Samsung's mobile division.

    Samsung's recent slump stands in stark contrast to the performance of Apple, which reported a 38 per cent profit jump for the second quarter to US$10.7 billion (S$14.7 billion) last week.