Samsung reports profit increase despite a significant drop in sales

Income shrinks by almost six percent. Even so, pre-tax operating profit grew by more than 23 percent. The most important source of revenue and profit is again the semiconductor division.

Samsung generated 52.97 trillion won (44.36 billion euros) in the second fiscal quarter. Income shrank by 5.6 percent compared to the same period last year. Even so, net income rose 7.3 percent to 5.56 trillion won. Pre-tax operating profit even increased 23.5 percent to 8.15 trillion won – thanks to a very good result from the semiconductor division.

Samsung (Image: Samsung)They accounted for 25.05 trillion won, an increase of 13 percent. From this, Samsung generated an operating profit of 5.43 trillion won. A year ago, it was just 2.03 trillion won. The display division also generated a surplus from falling sales – a year ago, the Samsung division still posted an operating deficit of 450 billion won.

The IT & Mobile Communication division, which also includes the smartphone division, is primarily responsible for the decline in consolidated sales. 20.75 trillion won means a drop in sales of 20 percent, which, however, has no impact on the operating result. While the mobile division reported a surplus of 0.30 trillion won a year ago, it was now 1.95 trillion won.

Samsung’s third largest division, consumer electronics, contributed 10.17 trillion won to net income (down 9 percent). Its operating profit increased slightly to 0.73 trillion won. The subsidiary Harman again generated an operating loss of 0.09 trillion won. They also had to accept a 39 percent drop in sales.

In the second half of 2020, Samsung continues to expect an uncertain economic situation, which should affect all business areas. The COVID-19 pandemic made Samsung specifically responsible for the decline in sales of the smartphone division. In addition, investments in the expansion of 5G networks would be postponed in the home country of South Korea and in the rest of the world.

The electronics company plans to counter these uncertainties by increasing profitability. The smartphone business is also to be strengthened with new flagship models and the expansion of the portfolio in the middle price segment. Specifically, Samsung mentioned new products in the model series Note and Fold – both are expected for the upcoming unpacked event on August 5.

Apple presents its balance sheet for the months of April, May and June after the market closes. Then it will be shown how badly the Corona crisis has particularly affected iPhone sales. After all, in some regions the company was unable to use the important sales channels of the Apple Stores for a long time.


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