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Samsung’s Q2 2018 earnings show its record profit run is ending

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Last updated: July 31st, 2018 at 10:01 UTC+02:00

Samsung has posted record profits in every quarter over the past year but it was expected that the momentum would be slowing down by the second quarter of this year. Many analysts had predicted that the company’s record profit run would be nearing an end by Q2 2018. The company’s own earnings guidance for the quarter suggested as much.

The company released its official Q2 2018 earnings results today and they show that the record profit run is indeed losing momentum. Overall revenues are down 4 percent compared to the same period last year.

Samsung’s Q2 2018 earnings

The earnings result is in line with the guidance that Samsung issued earlier this month. It posted 58.48 trillion won or about $52 billion in revenue compared to 61 trillion won or $54.7 billion in the same period last year, a 4 percent dip.

Samsung’s quarterly operating profit came in at 14.87 trillion won or $13.3 billion which represents a 6 percent increase compared to Q2 2017. Samsung posted an operating profit of 15.64 trillion won or $14.49 billion in Q1 2018. Q2 2018 is thus Samsung’s slowest quarterly profit growth in over a year.

The company puts the decline in revenues on softer sales of smartphones and display panels. Demand for memory chips remained robust. It’s a market that Samsung dominates but that wasn’t enough to prevent revenues from dipping this past quarter. The memory business did make a significant contribution to the higher operating profit.

The semiconductor business remains Samsung’s cash cow. It saw consistent demand for DRAM chips and NAND flash memory amid a decline in NAND prices. The display business remained under pressure this past quarter due to weak demand for flexible OLED panels with shipments and prices for LCD panels dipping as well.

The Consumer Electronics Division’s profits were lifted due to stronger sales of premium TVs such as the QLED models due to seasonality brought on by the global football event. Samsung expects demand for its memory chip products to remain strong going forward. Flexible OLED shipments may rise as well.

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