Quarterly sales at Samsung’s telecommunication division decreased 8 percent to 26.06 trillion won, with a 7 percent decline in mobiles sales amid lower sales of middle-to-low end models and increased marketing expenses.
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The company also said on Thursday it will be flexible on pricing for its premium Galaxy S6 smartphone models to keep sales up.
“Samsung’s new S6 helped fatten up component profits but it failed to meet the golden timing of demand for the device because of the supply issue”, IBK Securities analyst Lee Seung-Woo told Bloomberg.
Analysts have suggested that Samsung’s results are being hurt by the fact that its phones are coming under attack from the new iPhones at the top of the price range, and from cheaper Asian handsets at the bottom.
The company said handset sales slipped 6.3 percent on-year in the second quarter to 89 million units, indicating that the Galaxy S6 series, which was launched in April, posted weak sales. At present, the Galaxy S6 (32 GB) costs Rs 39,850 while the curve-screened S6 Edge (32 GB) is listed for Rs 47,949 on e-commerce site Amazon. The company advanced the release date of its next device for high-end users to combat slowing demand in China amid gains by Xiaomi Corp. and Huawei Technologies Co.
The company is scheduled to hold an event on august 13 in New York city, bringing forward its usual product launch schedule by one month. Samsung’s operating income stood at five.nine billion U.S. dollarscontinuing its steady recovery after a surprising earnings shock in the third quarter of previous year. The sharp profit drop in the mobile business came despite its ambitious start to the quarter with the launch of two flagship smartphones: the Galaxy S6 and the S6 Edge featuring a curved side display.
But its markrting gamble on its new flagship phone isn’t paying off as well as the company had hoped. Revenues fell to KRW 48.54 trillion from KRW 52.35 trillion a year ago, and operating profit dropped to KRW 6.90 trillion from KRW 7.19 trillion.
Shares in Samsung were trading 2.8% lower after the announcement.
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Samsung experienced “supply difficulties from higher-than-expected market demand for the Galaxy S6 Edge”, the company said in a statement released alongside their second quarter financial results.
