Samsung’s mobile business made profitability gains in the second quarter despite weaker smartphone sales, as it focused on cost optimisation efforts including reducing marketing expenses and offline promotions.
On an earnings call, Mobile Communications business VP Lee Jong-Min said efforts over the year to end-June to optimise its mass-market line-up had produced tangible results in terms of profitability, stating “we will strive to keep it at a stable level”.
Operating profit for its IM division (comprising the IT and Mobile Communications units) jumped 25 per cent to year-on-year to KRW1.9 trillion ($1.6 billion), with revenue dropping 19.8 per cent to KRW20.7 trillion.
Lee said its mobile network unit experienced Covid-19 (coronavirus) related delays to 5G deployment plans in South Korea and overseas, impacting revenue. He said the smartphone market has gradually recovered since June and expects a sequential improvement. It is tipped to unveil new flagships at an event next week, while expanding sales of mid-tier models, which Lee said should boost its overall performance.
But, he said uncertainties around Covid-19 remain and it expects competition to intensify in H2 as companies try to make up for lost ground in H1.
Memory push
On a group level, net profit rose 8.5 per cent to KRW5.5 trillion on demand for memory chips and appliances, and a one-off gain in its Display Panel Business. Consolidated revenue fell 5.6 per cent to KRW52.9 trillion.
The company said a partial recovery in global demand since May helped offset some Covid-19 effects, resulting in higher earnings than initially expected.
Earnings from its memory business improved as sales increased 11 per cent to KRW18.2 trillion.
Total capex in the first half was KRW17.1 trillion.
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