Analysts lower Samsung Q2 earnings expectations amid concerns over Galaxy S6 sales

Samsung received bearish analyst predictions regarding its Q2 earnings growth amid concerns about sales of its Galaxy S6 smartphones, though most backed the company to record higher profit than in the first quarter of this year.

While a poll of 39 analysts by Thompson Reuters produced an average forecast for Samsung's second quarter profit of KRW7.2 trillion (€5.7 billion/$6.3 billion), Reuters noted that 20 of those analysts have cut their predictions by an average of 3.9 per cent over the past 30 days.

Financial analysts previously tipped Samsung to generate a profit in the high KRW7 trillion range, but reduced their forecasts amid concerns about the company's ability to meet demand for the new flagship smartphone models following shortages in the supply of curved displays used in the Galaxy S6 Edge, and economic challenges in Europe and China, the news agency explained.

If accurate, the predicted Q2 profit would still be higher than the KRW4.63 trillion Samsung earned in the opening three months of 2015, and analysts remain confident that the company will increase full-year profit from KRW25 trillion in 2014 to KRW27.8 trillion in 2015, Reuters added.

Samsung, for its part, appears to have conceded that demand for its latest flagship devices will not be as high as originally predicted. Reports over the weekend state that the company has stopped procuring CNC milling machines at a plant in Vietnam. The machines are mostly used to produce metal casings for the Galaxy S6 models, and Samsung began ramping up procurement in 2014 ahead of the launch of the new devices, Business Korea reported.

Counterpoint Research in June said Samsung sold 6 million Galaxy S6 models in the first three weeks the units were on sale (Apr. 10 to Apr. 30), which was higher than sales of the company's previous premium smartphone, the Galaxy S5, during the same period of 2014.

However, the research company also noted that Apple's iPhone 6 and iPhone 6 Plus outsold the Galaxy S6 during April. Neil Shah, research director at Counterpoint, said the Galaxy S6 outsold the S6 Edge during April, but predicted the latter unit would become the more popular device with consumers in the long run. Sales of the S6 Edge were restricted by supply shortages, Shah explained noting that the "curved glass is certainly going to be a challenge for production as it is the first of its kind".

The South Korean vendor is due to release Q2 earnings guidance tomorrow (Jul. 7) and issue full results at the end of the month, Reuters said.

For more:
- see this Reuters article
- view this Business Korea report

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