Samsung's Q2 financial results were posted today and while they might sound good to the man on the street - record revenue and record profits - investors had expected a bit more. The revenue figure for Q2 2013 was 57.46 trillion won and the net profit was 7.77 trillion won ($6.9 billion, £4.49 billion). These figures show an impressive gain in profits year-on-year of about 50 per cent. However investors had expected a profit figure of 7.96 trillion won so the share value has dipped following the results.
Markets unimpressed
Samsung reported record breaking profits for the sixth straight quarter but shares dipped on the Q2 2013 results announcement. It achieved a lower profit than was expected by the markets and expectations are always very important to investors. Also Reuters reports that "investors [are] cautious ahead of the U.S. Federal Reserve's policy-setting meeting next week", what will happen at that meeting is a big unknown. Therefore investors aren't getting carried away but are taking profits and acting defensively.
Samsung also said, in forward looking statements, that it "expected its average selling prices of smartphones to decline slightly in the third quarter, because of the growing portion of mid-and low-end smartphones."
If you look at the 'Sales' chart for the business, above, you can see the business activities of Samsung broke down into CE (Consumer Electronics), IM (IT & Mobile communications), DS (Device Solutions) and DP (Display Panel) categories. The largest sector for Samsung Electronics is Mobile. Mobile sales revenue rose by nine per cent quarter on quarter but you can see in the 'Operating Profit' chart that profits on mobiles were down three per cent quarter-on-quarter.
Samsung says the lower profits for the mobile business are due to "marketing costs", reports the Washington post. The Galaxy S4 flagship sold 10 million units during its first month on sale but it is expected to go downhill from now on as rivals, including Apple, launch refreshed handsets. This will lead to price cuts on the Galaxy S4 which will also hurt profitability. Meanwhile Samsung's PC business didn't do so well during Q2 as "shipments declined due to weak demand".
To advance further and keep momentum strong Samsung has said it plans to spend a record amount this year (24 trillion won) on its mobile, semiconductor and display panel businesses.
