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Galaxy phone sales propel Samsung profit to two-year high

Published 28/07/2016

The launch of Samsung's S7 Edge saw strong demand from consumers
The launch of Samsung's S7 Edge saw strong demand from consumers

Samsung has reported forecast-beating earnings results that were the best in two years as consumers snapped up its Galaxy smartphones in signs of a revival in the electronics giant's mobile phone business.

The South Korean company said its April-June net income rose 2% over a year earlier to 5.85 trillion won (£3.9 billion), compared with 5.75 trillion won a year earlier.

That was slightly higher than forecasts, which have been revised up in recent months to reflect stronger-than-expected sales of the new phones. Analysts had forecast net income of 5.79 trillion won, according to FactSet, a financial data provider.

Sales rose 5% to 50.94 trillion won (£34.3 billion), while operating profit surged 18% to 8.14 trillion won (£5.4 billion), in line with the company's guidance earlier this month.

Samsung, the world's largest smartphone maker, beat forecasts even as growth in the overall smartphone industry slows and as its rival Apple, the world's second-largest smartphone maker, struggles to boost iPhone sales.

Apple reported earlier this week a 27% drop in profits, hit by the decline in iPhone sales.

Samsung's mobile business reported 4.32 trillion won (£2.9 billion) in operating income during the three-month period, its best quarterly performance since the second quarter of 2014.

The Galaxy S7 and S7 Edge smartphones drove the profit gain. The company launched the latest versions of its flagship smartphones in March, several weeks sooner than it did last year.

Early launches helped Samsung report strong sales during the first quarter but there were doubts that it could sustain the momentum during the second quarter. The latest results dispel that, showing consumers continued to snap up Samsung's new phones in spring.

The stellar performance of Samsung's mobile division is also a sign that its experiment with smartphone designs is paying off.

Samsung introduced the first of its flagship Edge smartphone series last year, which featured curved display that wraps around two corners of the device. But in 2015 it failed to capture demand because it ran into trouble mass producing curved displays.

The S7 Edge, with similar designs as its predecessor, saw robust demand from consumers and this time Samsung was able to deliver the products on time. The company said the Galaxy S7 Edge sales proportion increased.

Success of its Galaxy S7 smartphones boosted Samsung's own component businesses. Samsung said sales of OLED, or organic light-emitting diode, display panels went up, helped by healthy sales of flagship smartphones and higher demand for flexible displays for the S7 Edge. Samsung dominates the global supply of OLED display panels for mobile phones.

AP

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