Samsung forecasts profits slump

7 July 2011 Last updated at 01:46 GMT Visitors to a Samsung trade stand The profit warning did not come as a surprise to electronics industry analysts Samsung Electronics has forecast a 26% drop in profits as its liquid crystal display (LCD) business continues to suffer.

Samsung estimates that its operating profit for the April to June quarter will be 3.7tn won ($3.5bn; ?2.2bn), down from 5.01tn won a year earlier.

The South Korean company did not release a net profit figure.

Samsung is the world's top maker of flat-panel televisions and memory chips.

Smartphones boost

Analysts said the slump was not much of a surprise.

"[The forecast] is slightly better than what the market had been expected, as many had been slashing their forecasts recently due to losses from the LCD division," said Kim Young-chan from Shinhan Investment Corp.

Despite the bleak outlook, some industry watchers expect Samsung's performance to improve in coming months, largely because of booming sales of its Galaxy line of smartphones and tablets computers.

At the end of June, Samsung had sold about three million units of its latest Galaxy model globally, according to the company.

"It will be again smartphones which will lead earnings recovery in the second half of this year, although competition may get tough again in the third quarter when Apple introduces a new iPhone," said Mr Kim.

That increased competition, along with the uncertainty in the global economy, would continue to put pressure on Samsung for the rest of the year, analysts said.

Samsung will provide detailed quarterly results later this month.


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