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Samsung reports 15 percent revenue drop from previous quarter

updated 12:00 am EDT, Thu July 31, 2014

Revenues down from previous year, quarter, second half of year 'will remain a challenge'

Results for Samsung's second quarter of the 2014 fiscal year were posted today, showing declining revenues for the third straight quarter. Samsung warned investors at the beginning of the month that it expected a drop of 24 percent from 2013, missing projections in the area of $1 billion. The second quarter, which ended June 30, saw net income of only $6.1 billion (6.25 trillion won).

In the earnings guidance, Samsung stated that it expected to hit about $7 billion (7.2 trillion won) in operating profit and $50 billion (52 trillion won) in consolidated revenues. The estimate was close, with the electronics manufacturer hitting $51 billion (52.35 trillion won) in consolidated revenues and $7 billion (7.19 trillion won) operating profit for the quarter.

Compared to the previous quarter, revenues fell two percent from $52.3 billion (53.68 trillion won). A $3.8 billion (3.99 trillion won) reduction in sales from the IT and Mobile Communications (smartphones and tablets) division is responsible for the approximate 12.2 percent drop in revenues compared to the last quarter. All other sales categories outperformed the first quarter figures.

Year-over-year comparisons saw consolidated revenues decrease by approximately 8.9 percent. Revenues for the second quarter of 2013 were 57.46 trillion won, or $55.9 billion by today's exchange rates. IT and Mobile Communications underperformed as well when compared to the $34.6 billion (35.54 trillion won) in 2013. It represents a decline of $6.9 billion (7.09 trillion won), or about 20 percent.

Operating profit didn't paint a better picture, as Samsung saw a drop of 15.3 percent from the first quarter of 2014. During the first quarter, operating profits totaled $8.2 billion (8.49 trillion won), making the revenue change a reduction of $1.2 billion (1.3 trillion won). The mobile division did, however, bring in the bulk of the profit with $4.3 billion (4.42 trillion won). Compared to second quarter of 2013 income of $9.2 billion (9.53 trillion won), the recent results saw a revenue decrease of $2.2 billion (2.34 trillion won) or approximately 25 percent.

"Looking ahead, the second half of 2014 will remain a challenge," said Samsung. "With strong seasonality, the Consumer Electronics Division expects to see gains in the third quarter driven by shipments of premium TVs with curved and UHD features."

Samsung expects display panel sales to increase for the second half of year, due in part by seasonal demand at the end of the year. The company says it's aiming at improving profits by increasing the sales of Ultra HD televisions as it develops more products for the high-end market. Consumer Electronics will see growth compared to last year, even as competition in the market increases, said Samsung.

The mobile business may be in trouble for the remainder of the year, even though it's the most profitable division Samsung has. Samsung recognizes that demand for mobile devices was lower in the second quarter, but thinks that it can combat growth later in the year with new products as growth rebounds. The company expects to launch more premium devices, including a large flagship model, mostly likely the Note 4 that's said to be announced in September.

by MacNN Staff



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