Samsung flags 60 percent plunge in Q3 operating profit

Samsung 3

Samsung Electronics on Tuesday flagged a near 60 percent on-year plunge in operating profit, as its key smartphone sector continued to struggle in the face of increased competition.

Operating profit for the July-September period was estimated at 4.1 trillion won ($3.8 billion), down 59.6 percent from the third quarter last year, the company said.

Sales were estimated at 47 trillion won, down 20.4 percent from 2013.

While smartphone shipments increased slightly, “operating margin declined due to increased marketing expenditures and a lowered average selling price, driven by reduced proportional shipments of high-end models coupled with price decreases for older smartphone models”, the South Korean electronics giant said in an explanatory note.

The company warned that uncertainty in the mobile sector would carry through into the fourth quarter, although it promised a new line-up of top-end smartphones featuring “new materials and innovative designs”.

The mobile market, which has been the key driver of Samsung profits in recent years, has become increasingly saturated, while competition has intensified from cheaper Chinese handset makers such as Huawei and Lenovo.

In July, Samsung reported a 20 percent drop in net profit for the second quarter, and its shares are sitting at a two-year low.

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