Samsung Electronics on Thursday reported a record operating profit of 14.1 trillion won ($12.7 billion), up 72.7 percent year-on-year, for the second quarter of 2017. Despite an overall record-breaking performance during the three-month period through June, the company's mobile business suffered a slight decline in Q2 operating profit, compared to the same period last year.
Samsung reported that the sales revenue for its mobile division was up 13 percent quarter-on-quarter to reach 30 trillion won in the second quarter of this year. However, the division's quarterly operating profit marginally dropped to 4.1 trillion won from 4.3 trillion won from the same period a year earlier.
Samsung stressed its increased quarterly earnings driven by the Galaxy S8 and Galaxy S8+, which Samsung claimed, "outsold the Galaxy S7 series in almost all regions." According to South Korean tech titan, the larger Galaxy S8+ performed better than the Galaxy S8, accounting for over 50 percent of the overall series.
"However, despite the strong sales performance of premium smartphones, Samsung's total smartphone shipments remained at a similar level QoQ, due to decreased sales of mid- to low-end products," the company said in a statement, adding that strong component prices also contributed towards the mobile division's annual profit drop.
Although Samsung didn't put the blame on the Galaxy S8 series for the largely flat performance of its mobile business, some analysts reportedly said that sales of the company's new flagship smartphones have not surpassed those of the Galaxy S7.
According to local media reports earlier this month, Samsung sold 9.8 million Galaxy S8 units in the first 60 days following launch, about 20 percent less than the 12 million Galaxy S7 units sold in the first two months of sales last year.
"Since the 10 million shipment, Samsung is not revealing sales figures possibly due to slowing sales," local media quoted an analyst as saying at the time. "We assume the S8 is selling less than the S7."
Samsung remains optimistic, but cautious
In the second half of 2017, Samsung expects demand for smartphones and tablets to increase as the market gets closer to the festive season. However, the company is also expecting intense competition as new smartphone models are slated to be released by other manufacturers.
Apple, Samsung's main rival in the premium smartphone segment, will launch its redesigned iPhone 8 in the fall. HMD Global is also slated to launch a new flagship handset, dubbed Nokia 9, sometime later this year to take on the likes of Apple and Samsung.
"In response, Samsung will launch a new Galaxy Note with enhanced performance and features, to maintain the strong sales momentum of its premium smartphones, together with the Galaxy S8 and S8+," the South Korean tech giant said, adding that it would continue to focus on demand from emerging markets to take its mid- to low-end smartphone segment forward.
A tough third quarter
Samsung, however, said that its revenue and profit for the third quarter may decline as the company's marketing expenses will increase due to the launch of the new Galaxy Note 8. The company will unveil the new phablet on August 23 in New York.
It was Samsung's chip business, which was the top earner during the second quarter with profit rising to a record 8 trillion won from 2.6 trillion won in the same period last year. The semiconductor unit achieved this performance due to strong demand for high-density DRAMs and SSDs for servers in a low-supply environment.
When it comes to Samsung's Display Panel segment, the revenue was up 20 percent to 7.71 trillion won, driven by increased sales of premium OLED screens and high-end, large-size LCD screens.
"Looking ahead to the third quarter, the company expects favourable semiconductor conditions to continue, although overall earnings may slightly decline QoQ as earnings weaken for the Display Panel and Mobile businesses," Samsung said.
