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Samsung Q2 Profit Below Forecast After S6 Supply Shortage

Misses chance to boost sales before the arrival of Apple's next iPhone

Vjeran Pavic for Re/code

Tech giant Samsung Electronics on Tuesday said April-June earnings will likely miss expectations, deflating hopes for a rapid return to strong growth after supply shortages plagued its latest smartphone launch.

Operating profit for the second quarter likely fell 4 percent from a year earlier to 6.9 trillion won ($6.13 billion), the world’s top smartphone maker said in a regulatory filing, compared with a 7.2 trillion won profit average forecast from a Thomson Reuters I/B/E/S survey of 39 analysts. Revenue for the quarter is likely 48 trillion won, the company said.

The result would be the highest quarterly profit since the second quarter of 2014. Samsung did not offer any details for its estimates and will disclose detailed results in late July.

But even though the South Korean firm’s annual profit is expected to rebound this year from the three-year low set in 2014, the firm’s stock price has languished amid doubts about sales of the new Galaxy S6 smartphones.

Some analysts believe supply shortages that have plagued the curved-screen S6 edge model capped sales during the quarter, even though Samsung has said it expects the combined sales for the flat-screen and curved-screen S6 models to set a new sales record for the company.

The S6 edge shortages may have cost Samsung an opportunity to boost sales before Apple Inc’s new iPhones launch around September. The company says it has since resolved the issue by adding capacity.

Currency volatility for some emerging countries and soft economic conditions in major economies like China and Europe also likely weighed on sales, analysts say.

The company’s chips division likely remained the top earner, analysts say, as sales growth for the system chips business is seen making up for the drop in DRAM chip prices for personal computers.

(Reporting by Se Young Lee; Editing by Stephen Coates)

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