Samsung 2Q16 operating profits rise 18% on brisk smartphone sales

Samsung Electronics Co. reported second-quarter profit that beat analysts' estimates, fueled by stronger sales for Galaxy S7 smartphones and aggressive cost cuts, Bloomberg reports. Samsung also aims to expand smartphone sales this year by launching new mid-range and low-end versions of the Galaxy A and J series while unveiling the new Galaxy C series exclusively for the China market.

Samsung maintained its lead as the dominant mobile-phone handset maker, helped by the release of new units, while Apple lost ground as consumers halted on purchases of iPhones.

Samsung has a new product in the pipeline - the much-awaited Galaxy Note 7 - which is slated to launch on August 2.

Samsung's component business achieved solid performance in the second quarter of 2016 although overall earnings decreased on year due to ASP declines in the industry, the company said.

Samsung's second quarter financial results have thrust the company into the limelight as it reported its most profitable three-month period since 2014. As smartphone competition continues to escalate and upgrades continue to slow, Apple will look to drive sales with a newly designed iPhone 7 combined with their upgrade program come this fall.

Revenue increased 5 percent over the year to 50.94 trillion won in the second quarter, and net income rose 1.7 percent to 5.85 trillion won.

Samsung's mobile division earned 4.32 trillion won in operating profit, up 56% from a year earlier.

Samsung late Wednesday said that its mobile unit accounted for more than half of its approximately $45.2 billion in revenue and its $7.22 billion in profit. In addition, mid- to low-end smartphones also contributed to the improved profitability, but flagships clearly grew operating profit by 57% while operating margin increased to 16.3%, the highest it has been in two years.

According to preliminary results from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, vendors shipped a total of 343.3 million smartphones worldwide in the second quarter of 2016 (2Q16).

The release of the company's "next big thing" might help, too.

Apple's iPhone sales are now facing a slump after leading the market for several years.

Television and component sales were also strong in the April-June period, the company said in an earnings statement, with increased profits among premium product ranges.

Source: Samsung 2Q16 operating profits rise 18% on brisk smartphone sales