Samsung’s Operating Profit Falls 24.5%

Samsung Electronics has said its operating profit fell 24.5% in April-June quarter due to slow growth in its smartphone business.

The world’s largest smartphone maker’s profit fell as it faced tough competition from Chinese makers of low-priced yet feature-laden handsets. The market’s growth has now shifted to low-end handsets in emerging economies.

Samsung said the won’s (South Korean currency) strength during the second quarter and a slowdown in overall smartphone market growth hurt the company’s bottom line. It also reported higher marketing costs as it tried to minimise inventories.

“The company cautiously expects a more positive outlook in the third quarter with the coming release of its new smartphone line-up,” Samsung said, adding that it expected a better smartphone sales and a seasonal increase in demand for its memory business.

However, analysts say the streak of year-on-year decline in profit could extend into the third quarter as well. Apple Inc is also expected to launch a successor to the iPhone 5 to compete with Samsung’s flagship smartphones.

In the mid- and low-end of the smartphone market, Samsung had reduced its prices due to tough competition, which will further reduce profit margins, some analysts pointed out.