Samsung sees slight drop in Q2 sales and profit rise despite coronavirus' spread
The company benefited from a one-time gain in its display business, even as its phone and other operations likely faced lower demand.
Samsung's Galaxy S20 hit the market just as the pandemic slowed down the global economy.
Samsung expects only a 7.4% decline in sales this quarter and a 23% rise in operating profit, as the novel coronavirus continues to ravage the globe. The company benefited from a one-time gain and from demand for its processors while its consumer-facing businesses likely struggled.
The company on Monday estimated that its second-quarter sales will total 51 trillion Korean won to 53 trillion Korean won ($42.8 billion to $44.5 billion), down from 56.13 trillion Korean won ($47.1 billion) a year ago. It also expects to report an operating profit of 8 trillion to 8.2 trillion Korean won ($6.7 billion to $6.9 billion), up from 6.6 trillion Korean won in the second quarter 2019 ($5.5 billion).
Analysts polled by Thomson Reuters expected revenue of 51.4 trillion won ($43.1 billion).
Samsung, as usual, didn't break down its preliminary results or explain what was helping or hurting its financials. But it did note that it benefited from a one-time gain related to its display business.
Samsung, one of the best-known companies in the world, sells more phones and TVs than any other vendor. It also has a huge business selling memory chips to device makers around the globe. In recent months, Samsung's chip business has been getting a boost from data centers that rely on the technology to store everything we're doing online. At the same time, those businesses Samsung's better known for have been struggling.
2020 was supposed to be a strong year for the phone industry, as innovations like 5G and foldable screens got people shopping again. Instead, financial struggles and worries about COVID-19 will limit the number of devices companies can make and how many phones people will actually buy. Even once the worst of the pandemic is behind the US and other markets, the global economy will likely continue to struggle.
In April, during its last quarterly earnings report, Samsung warned that the coronavirus would "significantly" hurt its operations in the coming months. The company's memory chip business has been benefiting from "robust" demand for servers and PCs as more people work from home, but its mobile, TV and other businesses have been hurt by the pandemic.