Samsung’s mobile division barely makes a profit due to Note 7 problems
The profit of Samsung’s smartphone division fell by 96 percent in the past quarter compared to the same quarter last year. The costs associated with the withdrawal of the Galaxy Note 7 also have an impact on the entire group.
The profit of the mobile division amounted to 100 billion Korean won, which is about 80 million euros. In the same quarter a year earlier, it was 2.4 trillion won, almost 2 billion euros. The difference in turnover is less significant, in the past quarter it amounted to 22.5 trillion won in the smartphone division and 26.6 trillion won a year ago.
The quarterly figures cover the period that ended on September 30, Samsung launched the Galaxy Note 7 in mid-August in a number of countries, including South Korea and the US. After numerous reports of exploded devices, Samsung finally decided in October to remove the device from the market in its entirety.
Samsung does not disclose details about the number of smartphones delivered. In their own words, deliveries remained stable despite the withdrawal of the Note 7, due to good sales of the Galaxy S7 models. Market researcher IDC thinks that Samsung shipped 72.5 million smartphones in the past quarter. That is a decrease of 13.5 percent compared to a year ago.
As a group, Samsung saw its profit fall to 5.2 trillion won, from 7.4 trillion won a year earlier. Turnover fell from 52 trillion won to 48 trillion won. The figures presented by Samsung are in line with expectations that were adjusted earlier in October following the withdrawal of the Galaxy Note 7.
Other divisions of Samsung fared better. For example, the Consumer Electronics division, which includes TVs and household appliances, saw profits double, while turnover remained about the same. Samsung attributes the good figures to the good sales of UHDTVs, among other things.
The display division and the business unit that produces chips also recorded stable figures. Samsung expects to be able to record growth again in the next quarter compared to a year earlier, due to good sales in the components sector.
Although the Galaxy Note 7 has been withdrawn from the market, Samsung expects to achieve fourth quarter sales comparable to the fourth quarter of 2015, due to good sales of the Galaxy S7 and S7 edge. However, the profit of the smartphone division will still be low in the fourth quarter due to the costs surrounding the Note 7 debacle.