The Strategist

Samsung operating profit falls by 56% in Q2

07/31/2019 - 12:17

Samsung Electronics recorded a more than double drop in profits in April-June compared with the same period last year. Shares of the South Korean company fell amid weak reporting, according to CNBC.
Operating profit in April-June amounted to 6.6 trillion Korean won ($ 5.6 billion), a decrease of 55.61% over the same period in 2018, said the world's largest smartphone maker. Samsung's consolidated revenue amounted to 56.13 trillion won.

"Weakness and price declines in the memory chip market persisted as the impact of stock adjustments by large data center customers in previous quarters continued, despite the limited recovery in demand," the company said in a press release.

Samsung shares fell by 2.58% on the Seoul exchange.

This is the second quarter in a row when the operating profit of the South Korean technology giant has more than halved compared with the same period last year. In January-March, Samsung's profit fell by about 60% in annual terms to 6.2 trillion won ($ 5.3 billion).

Samsung's semiconductor business in April-June showed consolidated revenue of 16.09 trillion won and operating income of 3.4 trillion won, which is almost 71% less than a year ago.

Samsung expects demand to grow in the second half of the year, although the company sees volatility in the industry as a whole due to increased external uncertainty.

South Korea’s dispute with Japan poses an additional threat to semiconductor manufacturers.

On July 1, the Japanese government announced introduction of new restrictions on the export of high-tech materials to South Korea, citing the "significant damage" inflicted on the trust relationship of the two countries.

Since July 4, individual applications are required in order to export to South Korea three types of materials (fluorinated polyimide, hydrogen fluoride and resists) used in the production of semiconductors and displays for smartphones and televisions.

Tighter export control measures may slow down the export process for several months, hitting South Korean technology giants such as Samsung Electronics Co., SK Hynix Inc. and LG Display.