Samsung’s Q2 earnings show just how big of a hit the Galaxy S7 series has been
Samsung is most certainly enjoying the fruits of its labor with the Galaxy S7 and the Galaxy S7 edge. The company announced its earnings for the second quarter ended June 30 2016 today. Revenue touched KRW 50.94 trillion ($45 billion) in the quarter which is an increase of KRW 2.40 trillion year-over-year. As expected, the company’s operating profit for the quarter hit KRW 8.14 trillion ($7.17 billion) registering a growth of KRW 1.24 trillion year-over-year. This is actually the highest operating profit of any quarter since the first quarter of 2014.
Samsung’s IT & Mobile Communications (IM) Division was a clear winner in this quarter. It saw its operating profit jump 57 percent to KRW 4.32 trillion while operating margin for the handset business jumped to 16.3 percent which is now at the highest it has been in two years. The company itself says that this substantial improvement in earnings is led by sales of the Galaxy S7 and the Galaxy S7 edge while a streamlined mid to low-end lineup also contributed to the improved profitability.
The component business did come under pressure this quarter. Overall earnings declined 28 percent year-over-year primarily due to the fall in average selling price of display panels and chips. The company did note that demand for mobile semiconductors and SSD increased during the quarter.
Samsung expects its solid performance to continue in the second half of 2016 primarily driven by an earnings increase in the component business due to sales growth in high value-added products as well as stable demand and supply conditions. The mobile division forecasts that its marketing expenditure will increase over the coming months. Samsung expects the component business to maintain good performance as demand and supply conditions for memory chips and LCD panels improve.