Samsung Electronics Co., the world's biggest technology firm by revenue put its second-quarter operating profit at seven-point-two trillion won, down 15% from the first quarter and 24% from a year ago.
Its estimate falls far short of analyst expectations of eight trillion won. It is the first time since the second quarter of 2012 that Samsung's operating profit fell below the eight-trillion-won mark, according to Korea's (KBS WORLD) website.
In an earnings guidance Tuesday, the smartphone and memory chip maker put its second-quarter revenue at 52 trillion won, down three percent from the previous quarter.
The technology firm attributed the fall in operating profit to a slowdown in the growth of the smartphone market and the recent strength of the won.
Samsung said it spent aggressively on marketing to lower its inventory at retailers amid increasing competition in China and Europe. It said the second quarter is traditionally a low season for smartphone sales in China, while demand for 3G phones weakened ahead of an expected expansion in 4G LTE phones in the second half of the year. It also cited an increase in price competition with local smartphone makers.
Samsung is estimated to have shipped 79 million units of smartphones in the second quarter, down from 89 million units in the previous three months.
It said, however, that it expects the won's appreciation to be limited and marketing expenses to lower mobile inventory to be minimal in the July-September period. Samsung also expects sales to increase with the release of new mobile devices. It said its memory business will also strengthen in the third quarter, which is a high season for the product.
Many analysts agreed that the poor results in the second quarter were due to a temporary rise in marketing expenses.
Samsung is scheduled to announce its final second-quarter earnings later this month.