Analysts predict drop in Samsung’s profits due to sluggish flagship sales

Samsung posted impressive quarterly earnings in the recent past owing to the remarkable performance of the semiconductor division. The story was no different during the first quarter of this year as Samsung posted strong quarterly results once again. This time, the early launch of the Galaxy S9/S9+ also helped Samsung to boost its earnings.

It appears the company’s bottom line may not benefit much from the sales of the flagship smartphones in the current quarter. Analysts from DB Financial Investment, eBest Investment Securities, Eugene Investment and Securities, and KTB Investment and Securities believe Samsung’s profits will drop in the second quarter of this year due to sluggish sales of the Galaxy S9/S9+. Accordingly, they have lowered forecast for Samsung’s operating profit in Q2 2018 to around 15 trillion won. For comparison, Samsung posted 15.64 trillion won in operating profit in the first quarter of 2018.

Lower TV sales have also influenced the forecast

Analysts are expecting Samsung to post an operating profit of around 500 billion won in the consumer electronics business in the current quarter. Along with the weak demand for flagships, lower TV sales have also influenced the forecast. They, however, expect Samsung’s semiconductor business to continue to do well given the rising prices of DRAM globally.

“The S9 is expected to hit the lowest sales of any flagship model since the S3 with just 30 million units this year,” said Lee Seung-woo at Eugene Investment and Securities, according to a report from Korea.

The Galaxy S9 and S9+ are not drastically different from their predecessors either in design or features. Despite the lack of any significant innovation, there were reports about the Galaxy S9 series doing well in the market after the launch. However, with growing competition from the Chinese rivals and the absence of a strong incentive to upgrade, it shouldn’t be surprising if the sales slow down after the initial rush by fans.