Sony and Samsung hit with fall in profits as smartphone sales slump

Sony and Samsung hit with fall in profits as smartphone sales slump

Samsung has announced it will make ‘strategic adjustments’ to the price point of its Galaxy S6 range after a fifth consecutive quarterly profit slump.

The manufacturer’s Q2 results for 2015 revealed a profit drop in its mobile division, with operating profit falling to KRW 2.76 trn (£1.5bn), down from KRW 4.42 trn (£2.4bn) in 2014. Samsung’s Q2 results were in line with its earnings guidance, released earlier this month.

Samsung blamed a supply shortage of the S6 Edge model caused total sales to fall below expectations. Sales were up from the previous quarter but fell from KRW 27.51trn (£15.3bn) in 2014 to KRW 25.5trn (£13.9) in Q2 2015 YOY. 

Speaking in an investor call, JinYoung Park, VP, Mobile Communications, said Samsung will continue to focus on the high end of the market, by reducing the pricing of the S6 range.

He said: ‘The overall smartphone market demand has decreased, as a slow seasonal market circumstances continued. However our revenue increased thanks to the S6 and S6 Edge. These sold evenly, however due to supply shortage of the Edge, caused by high market demand, the total sales were below expectations.’

‘Looking forward the market demand for smartphones is expected to increase but its growth rate will be slow compared to previous years. In our smartphone business we will strive to maintain the high end smartphones in H2 by adjusting the prices for S6 and edge depending on market circumstances, while also launching a new larger display model.’ 

The results come as Sony reported a quarterly operating loss of ¥22.9bn ($188m, £118m), up from ¥1.6bn (£82m) a year ago. The manufacturer’s operating revenue and sales fell 16.3% year on year, with Sony claiming that this resulted from its decision to not pursue scale in order to improve profitability. 

Sony’s results follow an ‘organisational change’ in the company, in a move to ‘transform the profitability’ of Sony Mobile. The company explained that this change is necessary to ‘optimise skill’ in the division with its results showing that these charges contributed to the overall operating loss.

 

 

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