SEOUL — Samsung Electronics’ second-quarter operating income has declined to a two-year low due in part by slowing demand for smartphones in China, the company announced this week.
The South Korean company said Tuesday in its earnings preview its operating income was 7.2 trillion won ($7.1 billion) for the three months ending June 30.
The quarterly profit represents a 24% drop from the previous year. It is below analysts’ expectations of about 8 trillion won, according to the Associated Press.
The figure was the lowest since the second quarter of 2012 when Samsung’s income stood at 6.5 trillion won, AP reports. Since then, Samsung’s operating profit never fell below 8 trillion won, largely driven by robust sales of Galaxy smartphones.
Sales fell 10% from the previous year to 52 trillion won in the latest period. The company did not provide its quarterly net profit and breakdown for its four business divisions.
Samsung, which had usually not elaborated on its financial performance during the earnings preview and waited until its full earnings release at the end of the month, issued a rare statement to explain its disappointing result, AP reports.
The company blamed the weak profit on the Korean currency’s appreciation against the U.S. dollar and the euro, as well as most emerging market currencies. The Korean won hit a 6-year high against the U.S. dollar earlier this month.
It also said sales of medium- and low-end smartphones were weak in the Chinese and some European markets because of stronger competition and sluggish demand. Fewer consumers in China bought handsets that run on the 3G mobile network as they waited for the growth of the faster 4G network.
Samsung, which had vowed earlier this year to aggressively expand its tablet sales, acknowledged it faced some challenges in selling tablet PCs, AP reports. Consumers did not replace their tablet PCs as often as they did with smartphones, while smartphones with a giant screen of around 5 or 6 inches, such as its Galaxy Note series, replaced demand for small-size tablet PCs that measured about 7 or 8 inches.
New products and demand for displays will boost results in the third quarter, the company said in a statement on Monday.
You can read AP’s complete story here.