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Samsung Q2 2018 earnings guidance hints at poor Galaxy S9 sales

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Last updated: July 6th, 2018 at 08:27 UTC+02:00

It was reported multiple times over the past couple of weeks that Samsung might see a dip in its revenues for the second quarter of this year. That does seem to be the case after looking at the Q2 2018 earnings guidance that the company has released today.

Samsung expects to bring in 58 trillion won or $51.8 billion in revenue for the quarter ending June 30 with an operating profit of 14.8 trillion won or $13.2 billion. The earnings guidance represents a 0.7 percent decline in sales for the company.

Samsung Q2 2018 earnings

Samsung has been posting record profits in every quarter over the past year but it appears that the momentum is slowing down. Q2 2017 was particularly good for the company as it cemented its status as the most profitable tech company in the world. Samsung reported revenue of 61 trillion won or $54.7 billion in the same period last year with an operating profit of 14.7 trillion won or $12.67 billion. It posted an impressive improvement of 72.7 percent compared to Q2 2016.

Analysts had estimated that Samsung would post 14.9 trillion won as operating profit in the second quarter of this year but Samsung itself expects to post 14.8 trillion won or $13.2 billion. Despite the 0.7 percent decline in sales, this represents an 11 percent increase in profit compared to the same period last year.

It's pertinent to note here that even though Samsung hasn't sent a new record with its revenues and profits, it earned a record $14.13 billion in Q4 last year, the company expects an 11 percent improvement in profit despite lower sales. This suggests that Samsung has improved its profit margins and made additional cost savings. Moreover, Q2 has historically been challenging for the company.

Many analysts are blaming the decline in sales on the Galaxy S9. There have been countless reports over the past few months that made claims about poor Galaxy S9 sales. Some reports have even said that the Galaxy S9 has sold the lowest of any Samsung flagship since the Galaxy S3 as shipments are expected to barely cross the 30 million unit mark this year.

There will be more clarity on the matter once Samsung releases the full quarterly earnings report later this month. It's difficult to say at this stage which division has contributed the most to the 11 percent profit increase though with the semiconductor division being the company's cash cow, it has likely played a major role in that.

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