Samsung forecasts weak 2Q profit as smartphone sales

SEOUL, South Korea — Samsung Electronics Co. said Friday its second-quarter operating profit rose 5 percent over a year earlier, a smaller than expected gain that showed an end to Samsung's record-breaking earnings streak.

In its earnings preview, the South Korean company estimated its April-to-June operating profit at 14.8 trillion won ($13.2 billion), missing expectations.

That represents a 5 percent fall from the previous quarter when its operating profit was at an all-time high of 15.6 trillion won.

It also means an end to Samsung's streak of record-breaking earnings fueled by the lucrative memory chip business. Samsung's quarterly operating profit posted gains since the fourth quarter of 2016 when it began to renew its record-high quarterly results.

Sales fell 5 percent over a year earlier to 58 trillion won ($51.7 billion).

Analysts have lowered their views on Samsung, the world's largest smartphone maker, citing weak smartphone sales. They said Samsung sold fewer-than-expected Galaxy S9 flagship smartphones while its mobile team spent more on marketing expenses. Weak global demand for premium smartphones as consumers don't upgrade their handsets to the latest version as frequently as they used to was another likely factor.

The weak global demand for premium smartphones could also affect Samsung's semiconductor business, which contributed about 60 percent of Samsung's overall profit.

Nomura Securities downgraded its view on Samsung last month, citing disappointing Galaxy phone shipments. It also cut its estimate on Samsung's semiconductor profit because softer smartphone sales could dent demand for microchips.

Samsung did not elaborate on its earnings preview. The company is due to give its net profit and breakdown figures among its business divisions later this month.

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