Samsung profit exceeds forecast on sales of S7 phones

Samsung Electronics reported second-quarter profit that beat analysts’ estimates, fuelled by stronger sales of Galaxy S7 smartphones and aggressive cost cuts.

Net income, excluding minority interests, was 5.83 trillion won (€4.63bn) in the period, the South Korea-based company said yesterday.

That compares with the 5.64trn won average analysts had forecast. The company also announced a 1.79trn won share buyback, the final stage of a plan announced last year.

Samsung has benefitted from sluggish sales of iPhones, as US wireless carriers promoted the Galaxy S7 for high-end consumers, reducing marketing expenses.

That could change in the second half, as the company faces new models from Apple. Lower prices for semiconductors and displays have 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.”

The stock has gained almost 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,” said Lee Kyeong-Tae, vice president of the mobile communications business.

Samsung will unveil its next-generation Note device, with larger displays, in the next few days, in New York, Brazil and in London.

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%.


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