Samsung’s smartphone business generated 4.32 trillion won in operating profit, accounting for more than half of the company’s total profit thanks to demand for Galaxy S7 smartphone series.
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Samsung is expected to unveil its new Galaxy Note smartphone next week and will likely start selling its phablet about a month before rival Apple Inc (AAPL.O) launches its new iPhones in September.
By contrast, semiconductor operations were sluggish, with operating profit falling 22% year-on-year to 2.64 trillion won.
Samsung Electronics Co. reported Thursday forecast-beating earnings results that were the best in two years as consumers snapped up its Galaxy smartphones, in a sign the company is getting its mojo back while rivals fail to deliver new smartphones. Shipments of the iPhone dropped to 40.4 million units from 47.5 million units, an year-on-year drop of 15 percent. The company credited strong sales of its flagship Galaxy S7 and S7 edge for the turnaround, with the edge model accounting for more than half of S7 sales.
Operating profit was up almost 18% at 8.1 trillion won, Samsung said in an earnings statement, reflecting a sizeable cut in mobile marketing costs – partly due to the underwhelming performance of the iPhone.
The second half of 2016 should see the company continue to report solid performance generated by increased sales in the component business while fierce competition is expected in the third quarter.
Samsung’s IT & Mobile Communications (IM) division was a major contributor, with Samsung stating it “saw substantial earnings improvement led by expanded sales of flagship products such as the Galaxy S7 and S7 edge”. Profitability on lower-end models also improved.
Samsung predicted a positive earnings result in the third quarter, with market consensus for the third-quarter operating profit set at 7.8 trillion won. The company said that it will continue to shore up the high-end of its smartphone business, which could help it entice customers who seem bored with the latest smartphones.
Samsung’s 30-second clip starts by showing off complicated pattern unlock screens, which suggest the company will deliver an easier method of unlocking your smartphone (like an iris scanner).
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It however added that the release of Galaxy Note will help improve its own sales numbers.
