It seems like just yesterday Samsung's finances for the first quarter of 2016 were being discussed, with sales seeing a sizable boost thanks to the early availability of the Galaxy S7 and Galaxy S7 Edge handsets. Lo and behold, it is now nearing the final part of Q2 and reports are already coming in about the potential profit performance of Korea's mainstay electronics manufacturer.
According to a report from Shinhan Investment, "Samsung Electronics is expected to report its second quarter profits above market expectations due to good sales of the S7, improvements to its flash memory chip business and lower smartphone inventory." It is expected that the ballpark figure will be in excess of 7 trillion Won, which would make this the first time since Q3 2015 – nine months ago – that the company will break into the 7-range. During said period last year, Samsung took in 7.39 trillion Won in profit.
Specifically, Shinhan's So Hyun-chul made the following claim:
Operating profits of Samsung's mobile business during the latest quarter will reach 3.6 trillion won, up 12.4 percent, year-on-year. Samsung is forecast to have shipped more than 14 million S7 smartphones for the three-month period ended June 30, up 40 percent a quarter earlier.
The investment firm also indicated that, "Samsung's device solutions unit, which mainly handles the memory chip business, is expected to report 2.6 trillion won in operating profits. We believe display results will turn to the black." The memory-related sales situation was something touched upon by Bernstein Research, which said that:
Looking forward to 2016, estimates will need to come down for the DRAM chip business as Samsung's DRAM operating profit margins will likely drift further down. Margins in the flash memory chips, on the other hand, are trending better than expected. Despite the strong handset performance, we believe Samsung will struggle to increase operating margins, year-on-year, for the handset division this year.
The consumer electronics division should perform very well in 2016 due to the Olympics, but the division is too small to move the needle. Display numbers are likely to be pressured due to pricing headwinds.
Suffice to say that things are looking quite good for Samsung's second quarter. The trend is likely to continue into the summer, as the conglomerate's new Note product, believed to be re-branded as the Galaxy Note 7 to avoid market confusion, launches. In addition it may be joined by a curved variant, a Galaxy Note 7 Edge, though it is unknown as to if this will simply be a design-related curve as on the Galaxy S7 Edge or if it will be a more pronounced and productive part, as with 2014's Galaxy Note Edge.
It is also possible that currency value fluctuations that take place between now and the end of the quarter could also come into play, along with Samsung's newly released Galaxy J (2016) series.
What do you think? Does Samsung have another solid sales situation in the saddle or could things get right rocky in the rear of the second quarter? What will this mean for future expectations? Leave your comments below and share!
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