Samsung mobile profit down by a third in 2Q 2014

A decline in profitability of Samsung's IT and mobile communications division has pulled overall profit for the Korean conglomerate lower.
Written by Chris Duckett, Contributor on

Samsung has announced an overall 15 percent fall in operating profit to 7.19 trillion won (US$6.97 billion) in its official earnings report for the second quarter of this year.

Leading the fall in operating profit was the company's mobile and IT arm, which saw its profit fall by 31 percent quarter-on-quarter to 4.42 trillion won from a first quarter operating profit of 6.43 trillion won. At the same time last year, the mobile division posted an operating profit of 6.28 trillion won. The mobile and IT arm of the company consistently produces the largest revenue and profit for the Korean giant.

The other divisions within Samsung saw operating profit increase, with operating profit from consumer electronics growing 300 percent to 0.77 trillion won, and semiconductor and display panel business saw operating profit rise 12 percent to 2.09 trillion won.

Overall, Samsung received 52.35 trillion won in sales, down 2 percent, which continued the slide in recent sales numbers, and collected 6.25 trillion won in net profit — numbers that were in line with guidance released by the company earlier in the month.

The company said an appreciation of the Korean currency saw 0.5 trillion won wiped from its profit, as well as needing to increase marketing spend to reduce handset inventory across its sales channels.

In the second quarter, Samsung sold 95 million handsets and 8 million tablets. Of the handsets sold, the percentage of smartphones sold was in the "high 70 percent" range, and the company expects the ratio to hit 80 percent in the next quarter as seasonal demand picks up.

Hyunjoon Kim, senior vice president of Samsung mobile said the company was planning a new model and new material usage in the high-end smartphone area, but would not provide further details.

The company also said that its enterprise SSD business expects to see increased sales thanks SSD usage by cloud computing vendors.

In response to the downturn in profit, all senior executives within the handset business, including company co-CEO JK Shin, have returned a quarter of the bonuses they received on July 8.

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