Samsung profit tops estimates on Galaxy S7, lower marketing costs

Samsung benefits from sluggish sales of iPhones as US wireless carriers promoted the Galaxy S7 for high-end consumers, helping to reduce marketing expenses


Shares of Samsung fell 1.3% to 1,507,000 won at the close of trade. The stock has gained 20% this year after three straight annual declines
. Photo: Reuters
Shares of Samsung fell 1.3% to 1,507,000 won at the close of trade. The stock has gained 20% this year after three straight annual declines . Photo: Reuters

Seoul: Samsung Electronics Co. Ltd reported Q2 profit that beat analysts’ estimates, fueled by stronger sales of Galaxy S7 smartphones and aggressive cost cuts.

Net income, excluding minority interests, was 5.83 trillion won ($5.1 billion) in the 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, the final stage of a plan announced last year.

Samsung has benefited from sluggish sales of iPhones as US wireless carriers promoted the Galaxy S7 for high-end consumers, helping to reduce marketing expenses. That could change in the second half as the company faces new models from Apple Inc. Lower prices for semiconductors and displays has also helped sales of the company’s other consumer electronics, even amid sluggish economic growth across the globe.

“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.”

Shares of Samsung fell 1.3% to 1,507,000 won at the close of trade. The stock has gained 20% this year after three straight annual declines.

“We will be implementing very active marketing activities in the second half to drive up actual purchases and through this, we plan to continue to maintain overall sales of our premium handsets,” Lee Kyeong-Tae, vice president of the mobile communications business, told a conference call. “Given the fact that we plan to launch a large screen flagship model combined with the maintained S7 prices, we expect the average sales price in the third quarter to improve.”

Samsung will unveil its next-generation Note device with larger displays on 2 August in New York, Brazil and in London, the company said. While the company is finalizing its capital spending plans, it expects a slight increase from the year earlier.

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

Samsung’s earnings came the same day that June quarter data on the global market was released, showing the fastest growth coming from Chinese vendors. Samsung maintained its global leadership and shipped 3.4% more smartphones, while those at fourth-ranked Oppo more than doubled and fifth-placed Vivo jumped 62%, according to data from Counterpoint Research. Bloomberg

Sponsored Links by Revcontent