On Thursday Samsung released its second quarter earnings report which revealed that the conglomerate made record profits arising largely from strong component sales. During the same period sales of the Galaxy S7 were eclipsed by those of the Galaxy S8 though the mobile division failed to post record revenues since sales of entry-level and mid-range level phones fell.
Strong sales of the S8 were attributed to the smartphones’ sleek design which allows for a bigger screen to be packed in a gadget that is slimmer and this elicited positive reviews. In an earnings guidance the South Korean conglomerate indicated that it expected heightened competition for the rest of the year.
“In the second half, demand for smartphones and tablets is forecast to increase as the market enters a period of strong seasonality. However, competition is expected to intensify as new smartphone models are released by competitors,” said Samsung in a blog post.
Though the iPhone 8 wasn’t specifically mentioned as the new smartphone model that is expected to pose a challenge to Samsung’s gadgets, the second half is when Apple is expected to launch its highly anticipated 10th anniversary smartphone. Traditionally the Cupertino, California-based tech giant releases new iPhones in fall.
Around the same time that Apple will be releasing its upcoming version of the iPhone, Samsung Electronics will also be launching the Galaxy Note specifically on August 23. Despite this Samsung is not optimistic about the performance of the premium smartphone in the market compared to the quarter whose results it just announced. The South Korean conglomerate instead expects revenues and profit to fall quarter-over-quarter as a result of an increase in the expenses involved in marketing.
In Samsung’s recording-breaking quarter net profit rose by 89% to reach a figure of $9.9 billion despite the tumult the company has faced in the recent past including a scandal in its home country of South Korea. The profits were boosted not just by strong Galaxy S8 sales but also components such as display panels and semiconductors which were sold to rivals including Sony and Apple.
Overall, revenues for Samsung came in at $54.2 billion and this an increase of 20% year-on-year. Operating profit also rose by 72.7% to reach a figure of $12.5 billion and this now places Samsung ahead of Apple which is expected to register a record profit of $10.6 billion in the quarter that ended on June 30.