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Samsung warns that profits will halve for the second quarter

Paul Lipscombe
July 5, 2019

Samsung has had teething issues with the Fold smartphone in the first half of this year

Samsung Electronics has announced that it expects operating profits to decline by more than half as it released its earning guidance for the second quarter. 

The South-Korean manufacturer has warned the market that profits will slide 56 per cent, with a predicted operating profit of between £4.2 billion. 

This figure is down heavily from the second quarter of 2018 when Samsung posted profits of £10.1 billion. 

In the earnings guidance Samsung also warned that it expects consolidated sales to decline from £39.82 billion last year to £35.67 billion for the second quarter of this year. 

IDC research manager Marta Pinto believes there has been a couple of factors that has led to the projected decline. 

Speaking to Mobile News Pinto said: “Samsung has been supplying LCDs for Apple and Apple experienced a bad first quarter which has most likely caused Samsung’s components business to suffer.

“Also there has also been the negative promotion around the Samsung Fold which has likely played some part and was something that Samsung would not have expected.”

In the past year Samsung has seen its market share challenged heavily by Huawei, with the Chinese vendor in hot pursuit of number one for market share.

Pinto also believes the uncertainty around Huawei with the China-US trade-war has contributed to Samsung’s downturn and negatively impacted on Samsung’s components division.

“The components suppliers are being in some way by possibly being pressured not to sell parts to certain vendors and this could have been a constraint for Samsung who may have lost out on this.” 

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