Samsung's chief financial officer warned on Wednesday that the company's second-quarter earnings are "likely to not be good", amid concerns over slowing growth in the smartphone market.
Yonhap News reported that Lee Sang-hoon said the Korean electronics giant will report a lacklustre financial performance for the three months ended 30 June, but did not provide specific details. Samsung typically issues guidance around two weeks before publishing its results. It is expected to report its Q2 numbers in the latter half of July.
In April, Samsung's first quarter operating profit declined, both at group level and at its closely-watched IT and Mobile Communications (IM) business, which accounts for nearly two thirds of group sales. The disappointing performance was driven by weak demand for tablets and smartphones.
The gloomy outlook is particularly troubling since Samsung's flagship smartphone, the Galaxy S5, went on sale in 150 countries on 11 April – near the start of Q2 – which suggests that it might not have been the runaway success that the company was hoping for, despite outselling its predecessor, the S4, by 1 million units in its first month.
Samsung is facing competition at the high end of the market from the likes of Apple, HTC and Sony. However, the growth that's left in the market is at the low-cost end, where it faces competition from companies like China's Huawei, ZTE, and Xiaomi, and India's Micromax and Karbonn.
Earlier in June, Samsung showed off the latest high-end addition to its tablet range, the Galaxy Tab S – its thinnest, lightest tablet to date. The company is no doubt hoping it will boost earnings at its IM division in Q3 to make up for an uninspiring Q2.