Samsung have seen a 20% drop in profits for their second quarter of the year, mainly due to a decrease in smartphone sales and an increase in the power of Korean currency. In monetary terms Samsung have made a net profit of 6.25 trillion Won (£3.6bn) down from the 7.7 trillion won from last year. Samsung are the largest manufacturer of mobile phones, with their handset division earning the bulk of the profits. Sales of smartphones have started to down for Samsung and along with other manufacturers they have had to start pricing more competitively which hurts the profit margin on each phone.
In a statement Samsung said “”The second quarter was affected by several factors including the slow global sales of smartphones and tablets and escalating marketing expenditure to reduce inventory”
An increase in the power of the Korean currency, the won, has also hurt Samsung. The won has had an increase of 11% against the US dollar and nearly 7% against the euro in the last year. This hurts companies such as Samsung who rely heavily on exports when they recieve their profits from the foreign countries. Samsung have said they have lost “about 500bn won” in missed revenues.
Samsung are remaining hopeful but are being realistic. New flagship products should ensure that they keep their top spot as the leading phone manufacturer, with a rollout of new models expected soon but they realise that it’s going to be a hard battle.
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Image courtesy of Samsung