Samsung profit tops estimates on S7

Visitors test Samsung Galaxy S7 edge smartphones at its showroom in Seoul. [Photo/Agencies]

Samsung Electronics Co reported second-quarter profit that beat analysts' estimates, fueled by stronger sales of Galaxy S7 smartphones and aggressive cost cuts.

Net income, excluding minority interests, was 5.83 trillion won ($5.1 billion) in the period, the Suwon, South Korea-based company said in a filing on Thursday.

That compared with the 5.64 trillion won average of estimates compiled by Bloomberg. The company also announced a 1.79 trillion won share buyback, the final stage of a plan announced last year.

Samsung has benefited from sluggish sales of iPhones as US wireless carriers promoted the Galaxy S7 for high-end consumers, helping reduce marketing expenses. That could change in the second half as the company faces new models from Apple Inc.

Lower prices for semiconductors and displays have also helped sales of the company's other consumer electronics.

"The smartphone and TV divisions led the earnings surprise for the quarter," said Greg Roh, an analyst at HMC Investment Securities in Seoul.

"Samsung did well in the first half, but it's a matter of how well it could defend itself from the overall downside risks in the second half."

Shares of Samsung fell 1.3 percent to 1,507,000 won at the close of trade. The stock has gained 20 percent this year after three straight annual declines.

"We will be implementing very active marketing activities in the second half to drive up actual purchases and through this, we plan to continue to maintain overall sales of our premium handsets," Lee Kyeong-tae, vice-president of the mobile communications business, told a conference call.

Samsung will unveil its next-generation Note device with larger displays on Aug 2 in New York, Brazil and in London, the company said. While the company is finalizing its capital spending plans, it expects a slight increase from the year earlier.

Revenue was 50.9 trillion won in the second quarter, slightly higher than the 50 trillion won of its July 7 preliminary earnings announcement.

Samsung's earnings came the same day that June quarter data on the global market were released, showing the fastest growth coming from Chinese vendors. Samsung maintained its global leadership and shipped 3.4 percent more smartphones, while those at fourth-ranked Oppo Electronics Corp more than doubled and fifth-placed vivo Mobile Communication Technology Co Ltd jumped 62 percent, according to data from Counterpoint Research.

Research company Canalys said the worldwide smartphone market grew modestly in the second quarter after a disappointing first quarter.

Global shipments reached over 330 million units, with Samsung leading the market with shipments around 80 million units.

It said Apple shipped 40 million iPhones in the quarter, a second consecutive annual decline in shipments. In third place, Huawei Technologies Co's shipments increased to 31 million on the back of record shipments in China and continued growth in Europe, the Middle East and Africa.

Bloomberg