Samsung second-quarter profit dips on slower demand for Galaxy smartphones

Samsung has weathered a series of setbacks, including an embarrassing global recall of its Galaxy Note 7 smartphone due to exploding batteries in 2016. (AFP)
Updated 31 July 2018

Samsung second-quarter profit dips on slower demand for Galaxy smartphones

SEOUL: Samsung Electronics on Tuesday reported a 0.1 percent dip in its second quarter net profit from a year earlier, blaming slower global sales of premium smartphones that dented demand for its flagship Galaxy device.
Net profit for the April to June period came in at 11.04 trillion won ($9.9 billion), slightly lower than the 11.05 trillion won in the same period in 2017, the company said in a regulatory filing.
An average of estimates compiled by Bloomberg News had forecast 11.6 trillion won for the period.
Operating profit was 14.87 trillion won, up 5.7 percent and in line with the estimate of 14.8 trillion won suggested in a preliminary guidance report released earlier this month.
But total sales fell 4.1 percent year-on-year to 58.48 trillion won, with the company’s consumer electronics and mobile businesses suffering.
“Second quarter revenue fell due to softer sales of smartphones and display panels,” Samsung said in a statement.
The earnings are sharply down from the 11.69 trillion won net profit registered last quarter, when the company reported a 52 percent jump on year.
The world’s biggest maker of memory chips and the flagship subsidiary of South Korea’s Samsung group, the company has weathered a series of setbacks, including an embarrassing global recall of its Galaxy Note 7 smartphone due to exploding batteries in 2016.
Adding to its troubles, its vice-chairman Lee Jae-yong, scion of Samsung’s founding family, was jailed last year for his part in the sprawling corruption scandal that brought down former president Park Geun-hye.
Lee has since been released after some of his convictions were quashed on appeal, and the company has posted record profits in recent quarters.
The disappointment over the second quarter earnings was reflected in mid-morning trade, with Samsung Electronics shares down 0.7 percent.
Weak sales of its new flagship smartphone, the Galaxy S9, drove down its earnings but robust demand for premium TVs — thanks to soaring interest in the recently concluded 2018 World Cup — and memory chips helped boost the operating profit.
Samsung’s chipmaking unit, which dominates the global market after the firm invested tens of billions of dollars to build and expand factories, provides chips for Samsung devices as well as those manufactured by competitors including Apple.
Although the company’s semiconductor business achieved record high operating profits of 11.6 trillion won, the earnings were lower than expected, with market forecasts averaging 12 trillion won.
“The semiconductor sector fell short of expectations but its outlook for the second half of this year is rather positive as demand for DRAM chips are solid... Therefore, chip prices are expected to remain strong,” a Samsung official said on condition of anonymity.
Analysts said the semiconductor division would continue its upward trajectory and set new records in coming months.
“Operating profit in the semiconductor sector is likely to hit the largest-ever 13.7 trillion won in the next quarter, due to the high DRAM chip prices and increasing shipments of NAND flash memory products,” said Park Yoo-ak, an analyst with Kiwoom Securities.
Samsung said it expected “growing demand for flexible OLED panels to drive earnings higher in the second half” of the year.
But “the mobile market condition will likely remain challenging in the second half amid pricing competition and new product launches,” it said, adding that it would respond by launching its Galaxy Note 9 smartphone earlier than expected.
The company said it would bolster its flagship lineup by marketing the new Note 9 “at a reasonable price” and packing its middle-and-low end products with updated features to fend off competition.
Samsung also said it would pay out dividends of 354 won per share for the second quarter on August 20.


Case against Ghosn excuse to get him out of Nissan, claim lawyers

Updated 13 November 2019

Case against Ghosn excuse to get him out of Nissan, claim lawyers

  • The former motor giant chief’s legal team has alleged that both his arrest and the prosecution efforts have been illegal

TOKYO: The drama surrounding the arrest of Carlos Ghosn, former boss of motor giants Nissan and Renault, has yet to reach its climax. Yet the plot continues to thicken with each new development.

On Monday, Ghosn’s defense lawyers unveiled court submissions highlighting the circumstances in which the 65-year-old executive was arrested and subsequently held in detention.

“We believe that Mr. Carlos Ghosn is innocent. We believe that the arrest and the prosecution efforts thus far are illegal and therefore Mr. Ghosn should be immediately released,” the head of his defense team, Junichiro Hironaka, said during a press conference at the Foreign Correspondents Club of Japan in Tokyo on Monday.

Hironaka claimed that Nissan wanted to kick out Carlos Ghosn from the company and therefore put together a team dedicated to searching around for something that would justify them to do that.

“This prosecution motion wasn’t initiated because the prosecution side believed that Mr. Ghosn had committed an illegal act. Fundamentally there is a problem with this being treated as a criminal act,” he said.

Hironaka further said that the prosecutor’s office is supposed to be acting in the public good for everyone and not behalf of a specific corporation.

“From the investigation level, there were various problems and mistakes with this case. Furthermore, the Japanese persecution office can’t reach overseas so they rely on Nissan employees to go into Mr. Ghosn’s offices and residences and removed objects illegally,” he said.

Hironaka said there is no evidence to support the alleged wrongdoing claim that Nissan made payments to SBA in Oman, and Ghosn re-directed that money to himself or his family.

“The amounts that were paid by Nissan matched exactly the amounts due to SBA,” he said.

The lawyer had a similar response to the reports connecting some donations by Ghosn to a school in Lebanon that would somehow benefit himself. “There is absolutely no evidence or factual basis for indicating that,” Hironaka said.

He said that his team is trying to access correct information and find out what evidence the prosecution might have.

“I have made an effort to share information with the media, including the foreign media, during this whole pre-trial motion,” he said.

Under the Japanese system, the prosecutors are not required to disclose all the evidence at their disposal. Japanese law requires that prosecutors must disclose anything related to any evidence related to the specific filings they make.

They must also disclose any evidence that is related to the filings that are made by the defense counsel. However, there is no requirement for them to disclose evidence from other parts.

Ghosn was arrested at Tokyo’s Haneda Airport on Nov. 19, 2018, on multiple charges related to his stewardship of the two companies.

The cases involved not only Nissan-Renault and Japan’s Mitsubishi Motors (part of the Franco-Japanese alliance), but also the Japanese and French governments along with various key players from Asia and the Middle East.

Nissan was on the brink of bankruptcy in March 1999, with about 2 trillion yen ($17.6 billion) in interest-bearing debt.

This is when it entered a capital partnership with major French automaker Renault SA. Ghosn has been credited for turning the company around dramatically since then.

However, fears that the high-profile CEO and chairman was planning to merge Nissan into a much larger multinational motor alliance appeared to have fueled speculation regarding the future of the company.

It was reportedly argued within Prime Minister Shinzo Abe’s government that the automaker would no longer be recognizably Japanese.

The case has larger ramifications and the two governments have routinely become involved in discussions related to its future.

According to news reports, when Macron and Abe met in Buenos Aires, the French president asked that the Franco-Japanese alliance be maintained.

On being asked by Arab News Japan about reports of a prosecution team visiting Saudi Arabia and Oman, Hironaka confirmed that the visit indeed took place after Ghosn’s arrest.

“However, we have not been given any access to any information that they may or may not have gathered there,” he said.