SEOUL: Samsung Electronics Co. reported a bigger-than-expected fall in second quarter profit on Thursday and said it was uncertain if earnings from its handset business would improve in the current quarter.

Samsung warned earlier this month that the second quarter would be its worst in two years as rapid growth in smartphone sales had faded. The company particularly struggled to compete in cheap smartphones, currently the fastest growing part of the global smartphone business. Samsung shares dived 4 per cent in Seoul.

Its net income for the April-June quarter dropped 20pc to 6.3 trillion won ($6.1 billion) from 7.8tr won a year earlier. That was the lowest since the second quarter of 2012. Analysts surveyed by FactSet forecast 6.5tr won income.

Sales fell 9pc to 52.4tr won while operating profit sank 25pc to 7.2tr won, in line with Samsung’s guidance earlier this month.

Robert Yi, head of investor relations, told a conference call that Samsung had higher marketing expenses as competition increased in mid- to low-end smartphones and because it tried to clear old inventory before the release of updated smartphone models in the fall. Tablet computer sales also fell, he said, citing weak overall demand.

Samsung sold 95 million mobile handsets in the quarter and smartphones were close to 80pc of those sales, Yi said. It sold 8 million tablet PCs.

Published in Dawn, August 1st , 2014