Samsung cautious on outlook, says mobile business environment tough

Samsung Electronics Co Ltd offered a downbeat outlook for the third quarter after April-June profit dropped on a supply shortage for one of its main smartphone models, underscoring continued headwinds for the tech giant. Samsung remained the world’s top smartphone seller in the second quarter, but investors and analysts say the South Korean firm’s inability to meet demand for its curved-screen S6 edge smartphones likely cost the firm in April-June. Second-quarter operating profit fell 4 percent to 6.9 trillion won ($5.9 billion), matching an estimate issued by the company early this month. But the firm doubled its interim dividend payout to 1,000 won per common share. “While 2H 2015 is expected to present mounting challenges, the company will try to improve earnings,” Samsung said in a statement. The mobile business reported an operating profit of 2.76 trillion won, down from 4.42 trillion won a year earlier. Samsung has said the supply problem is resolved and it is also is bringing forward the launch of its Galaxy Note phone. The company also said on Thursday it will be flexible on pricing for its premium Galaxy S6 smartphone models to keep sales up. But analysts say an expected unveiling of Apple Inc’s new iPhones in September will limit sales growth in the third quarter. The firm said on Thursday that the mobile division faces a tough business environment as smartphone market growth slows. On the bright side, the chips division reported an operating profit of 3.40 trillion won, up from 1.86 trillion won a year earlier on the back of healthy demand for memory chips and sales growth for its mobile processors. Overall, annual profit is expected to rebound from a three-year low marked in 2014, thanks to robust semiconductor profits and some stabilisation for the mobile business. An average forecast from a Thomson Reuters I/B/E/S survey of 48 analysts compiled prior to Thursday’s results tips this year’s profit at 27.3 trillion won though several have lowered their expectations in recent months. In addition to the supply shortage for the S6 edge model, some analysts are worried by softer demand from China and Europe. Research firm TrendForce last week cut its forecast for 2015 global smartphone shipment growth to 8.2 percent from 11.6 percent, citing a weaker world economic outlook. Reuters