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The new Samsung Ativ One 5 is put on show at Earls Court, London on June 20, 2013/AFP

Kenya

Samsung posts record Q2 profit, smartphone fears linger

The new Samsung Ativ One 5 is put on show at Earls Court, London on June 20, 2013/AFP

The new Samsung Ativ One 5 is put on show at Earls Court, London on June 20, 2013/AFP

SEOUL, July 26 – Samsung Electronics, the world’s largest technology firm by revenue, on Friday posted another record quarterly net profit, but weakening earnings momentum has fuelled fears over flagging demand for high end smartphones.

The South Korean giant said its April-June net profit surged 49.7 percent year on year to 7.77 trillion won ($6.96 billion) thanks to robust shipments of its flagship Galaxy S smartphones and higher chip prices.

Second quarter operating profit surged 47.5 percent on year to 9.53 trillion won in the same period as sales grew 20.7 percent on year to 57.46 trillion won.

The figures were in line with the firm’s forecast at the start of the month, although they were well short of expectations, which had been for an operating profit of 10 trillion won.

“Entering into a typically strong season for the IT industry, we expect earnings to continue to increase,” said Robert Yi, Senior Vice President and Head of Investor Relations.

But he warned: “We cannot overlook delayed economic recovery in Europe and risks from increased competition for smartphone and other set products.”

However, despite the record earnings Samsung’s share price has been falling wiping about $30 billion off the firm’s value since late April when the flagship S4 hit stores, as sales have not been as high as hoped.

That is despite the company spending billions of dollars on a global marketing campaign, squeezing margins, after launching the latest gadget at a lavish New York event in late March.

“Expectations had been too high for high end smartphone sales. Many investors now think the Galaxy S4 has not been selling so well,” Oh Young Bo, of Hanmag Securities, told AFP.

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