South Korean company Samsung Electronics today declared financial results for the second quarter ended June 30, 2016. The results indicates the company's strongest profits in over two years. Revenue was 50.94 trillion ($45.2 billion), up 5 percent on a year ago, while operating profit was 8.14 trillion ($7.22 billion), up 18 percent.
Samsung's mobile division accounted for over half of that revenue and profit, with the company pointing to strong sales of its well-received flagship Galaxy S7 and S7 Edge phones that continued from the previous quarter. The larger, more expensive Edge phone made up over half of Galaxy S7 sales, improving profitability for the lineup, while Samsung also benefited from a streamlined mid-to-low-end product lineup.
Samsung says it expects to maintain solid sales through the third quarter with the launch of "a new large-screen flagship smartphone;" the Galaxy Note 7 will be announced shortly.
According to the official press release, the IT & Mobile Communications (IM) Division saw substantial earnings improvement led by expanded sales of flagship products such as the Galaxy S7 and S7 edge. A streamlined mid-to low-end smartphone lineup also contributed to improved profitability. Operating profit for the IM Division was KRW 4.32 trillion.
The Consumer Electronics (CE) Division achieved significant earnings growth YOY led by strong sales of its premium lineup such as SUHD TVs, Chef Collection Refrigerator, AddWash washer and newly launched air conditioner.
The company estimated that the stronger Korean won against major currencies in the second quarter negatively impacted operating profit by approximately KRW 0.3 trillion, reflected mainly in the component business earnings.
Looking ahead to the second half of 2016, the company expects its solid performance to continue compared to the first half, mainly driven by earnings increase in the component business due to sales growth in high value-added products and stable demand and supply conditions. The set business is expected to continue its stable earnings while the IM Division expects marketing expenditure to increase.
In the third quarter, the company expects the component business to maintain its ‘solid performance’ due to improved demand and supply conditions for memory chips and LCD panels and stable earnings for OLED and System LSI. For the set business, the company forecasts marketing expenditure for the IM business to increase mainly due to a new flagship product launch and fierce competition in the industry. Meanwhile, weak seasonality is likely to impact the CE business.