Another Samsung business sees profits plummet

Samsung Electro-Mechanic, a component making affiliate of Samsung Group, saw its second quarter profit tumble year-on-year due to weak smartphone sales of primary client Samsung Electronics, reports ZDNet Korea’s Jeong Hyeon-jeong.

The company posted an operating profit of 21.2 billion won – less than one-tenth of the result from a year ago.  Revenue of 1.86 trillion won for the second quarter amounts to a drop of 22 percent.

The figures are in stark contrast to last year’s second quarter operating profit of 222.4 billion won and revenue of 2.38 trillion won, which were the highest for that year thanks to strong sales of Samsung Electronics’ Galaxy S4.

Samsung Electro-Mechanic says the slowdown of the worldwide smartphone market as well as falling demand for end-products produced by its clients are the main causes of the profit shock.

The company makes camera modules, circuit boards, and chip capacitors for handsets and other electronic devices.

Its biggest client, Samsung Electronics, said earlier this month that it expects profits to drop 24.5 percent. The world’s largest electronics company is facing a slowdown in its mobile business while margins are being hampered by a strong Korean currency.

Analysts expect Samsung affiliates that supply to the electronics giant to post lower-than-expected profits for the second quarter.

Source: ZDNet Korea (