Samsung profit misses estimates as growth stalls in smartphones

People taking a look at the Samsung Galaxy Note 8 at an event on Aug 23, 2017, in New York.
People taking a look at the Samsung Galaxy Note 8 at an event on Aug 23, 2017, in New York. PHOTO: AFP

SEOUL (BLOOMBERG) - Samsung Electronics Co's net income fell short of analysts' estimates as slowing growth in the global smartphone market hits demand for its Galaxy devices, while Chinese rivals ramp up competition to supply displays.

Net income rose to 11 trillion won (S$13.4 billion) in the three months ended June, the Suwon, South Korea-based company said in a filing on Tuesday (July 31). That compares with the 11.6 trillion won average of estimates compiled by Bloomberg.

The earnings results reflect Samsung's troubles in shoring up its mobile business even as the company enjoys resilient sales of memory chips. Phonemakers including Huawei Technologies Co and Oppo are increasing their global market share as Chinese display makers threaten the South Korean company with products ranging from cheaper televisions to state-of-the-art smartphone screens.

"Slumping sales of Galaxy S9 and an increase in marketing costs have hurt profit," Kim Yang-jae, an analyst at KTB Investment & Securities, said in a report. "Profit growth is likely to be minimal considering slowing demand and intensifying competition."

Operating profit was 14.9 trillion won on sales of 58.5 trillion won, the company said, confirming preliminary numbers released earlier this month.