Samsung lowers second quarter earnings forecast

Samsung expects second quarter sales to total 48tn won, 8% down on the same period the year before and 5tn won below Samsung’s previous estimate

Samsung is expecting quarterly results to be down on the previous year, warning that second-quarter sales and operating profit will miss its earlier earnings guidance. This will be the company's seventh quarterly results in a row down on the previous year.

After a relatively poor first quarter, the South Korean technology and electronics firm pinned its hopes for the quarter on the Galaxy S6 and S6 Edge lines, announced in March 2015.

But sales failed to meet expectations since opening on 10 April 2015, prompting Samsung to revise its expected second quarter operating profit down to 6.9tn won (£3.9bn), which is 4% down compared with 2014 and below the company’s previous estimate of 7.2tn won.

Second quarter sales are expected to total 48tn won, which is 8% down on the same period the year before and 5tn won below Samsung’s previous estimate.

Analysts said Samsung is struggling to achieve growth in a saturated smartphone market and sales of Galaxy S6 have been hit by supply shortage issues.

Samsung struggled to meet demand for the curved Galaxy S6 Edge, which proved to be more popular than expected, according to the Wall Street Journal.

But Samsung, which was geared for higher demand for the original S6, claims to have resolved the supply problems by adding capacity and now expects the combined sales of both S6 smartphones to achieve a sales record and put the company on track for the highest quarterly profit since the second quarter of 2014.

Samsung has lost ground at the high end of the market to Apple, which is enjoying renewed success after the release of the iPhone 6; and at the low end to cheaper Chinese rivals such as Xiaomi and Huawei.

According to Gartner, Samsung lost 10% of its market share in the final quarter of 2014 and lost its top position in unit shipments for the first time in four years, as a direct result of Apple's resurgence.

Analysts said that, while Samsung had enjoyed a competitive advantage when it introduced large screen smartphones, competitors had caught up.

Samsung shares rose 1% after reversing early losses on the new earnings guidance in Seoul, according to the BBC.

The company's final detailed second quarter results are expected to be released at the end of July 2015.   

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