Samsung has announced its Q2 2019 earnings, revealing a 55.6 percent year-on-year drop in operating profits. In the report Samsung published yesterday, the company said it was looking to the Galaxy Note 10, Galaxy Fold, and the Galaxy A series to help boost its profits in the second half of the year.
Samsung's operating profit in Q2 2019 came in at 6.60 trillion won (~$5.6 billion), compared to the 14.87 trillion won (~$12.58 billion) operating profit it reported in Q2 2018.
It's a significant drop, which Samsung largely attributed to, "The weakness and price declines in the memory chip market." For context, the company's chip business usually earns about twice as much as its consumer electronics division.
Samsung also noted "slower sales of flagship models and increased marketing expenses," despite strong overall shipments. Its postponement of the Galaxy Fold release, which was originally scheduled for Q2, also may have harmed its revenues (though the company didn't suggest this in its guidance).
Samsung's revenue saw a smaller decline than its operating profits did at a four percent drop. Samsung posted 56.13 trillion won (~$47.53 billion) revenue last quarter, compared to 58.48 trillion won ($49.51) revenue in Q2 2018.
What's Samsung's outlook for the rest of 2019?
Samsung foresees economic and trade "uncertainties" — likely a refers to the Japan/South Korea trade situation — affecting a number of areas of its business throughout the rest of 2019. This means Samsung may continue to see a quarterly drop in revenues compared to recent years. However, one area where Samsung is more optimistic about the rest of the year is with the release of new smartphones.
"In the third quarter, Samsung will focus on successful launches of new innovative products – the Galaxy Note 10 and Galaxy Fold," said Samsung in its report. "It will enhance the 5G smartphone lineup to take the lead in the new market and introduce more competitive A series models in the second half to extend the ongoing positive momentum in mass market smartphone sales."
According to The Investor, Samsung also believes the Galaxy Note 10 sales will surpass those of the Galaxy Note 9.
Samsung remained the biggest smartphone vendor by shipments in Q2 2019, but sales of the Galaxy Note 10, and especially the Galaxy Fold, are by no means guaranteed. The Galaxy Fold is among the most expensive smartphones Samsung has ever produced at nearly $2000, while the potentially $1,000+ Galaxy Note 10 may struggle to compete with the recent influx of high-quality midrange Androids.
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