Galaxy S6 fails to reverse Samsung's fortunes as profits fall

The launch of the Galaxy S6 and a reported £45m advertising campaign has failed to translate into sales for Samsung as profits fall by 8pc

A woman tries out the Samsung Galaxy S6 smartphone at the company's showroom in Seoul
A woman tries out the Samsung Galaxy S6 smartphone at the company's showroom in Seoul Credit: Photo: AFP/Getty Images

Samsung has reported its net profit has dropped 8 per cent in the course of a year as the company's flagship Galaxy S6 failed to set the smartphone market alight.

The South Korean tech giant reportedly spent £45m on advertising its latest handsets, the Galaxy S6 and S6 Edge, unveiled at this year's Mobile World Congress in March. Samsung has announced its profit for April - June fell to 5.75tn won (£3.2bn, $4.9bn), a year-on-year decline of 8 per cent - compared to the 6.9tn won (£4bn) and 4 per cent decline predicted in an earnings forecast issued earlier this month.

The company said it was planning to slash the price of the S6 and S6 Edge, as well as introducing new premium smartphone models to offset a 38 per cent decline in its mobile division's income.

"Despite the launch of Galaxy S6, improvement to earnings was quite marginal due to low smartphone shipments and an increase in marketing expenses for new product launches," Samsung said in a press release.

Samsung has now reported a drop in profit for seven consecutive quarters. While it remains the world's largest smartphone vendor, it is facing increasing competition from rival Apple and cheaper rivals, particularly in China.

The company admitted its mobile offerings were expecting to face a "difficult business environment", and that a drop in overall smartphone sales was caused by declining demand for older middle to low-end models.

People queue outside an Apple shop in London

Queues outside Apple's Covent Garden store to purchase the iPhone 6 and 6 Plus last September

Apple reported net profits of $10.7bn in the three months to June 2015, compared to $7.7bn the previous year. Its mobile division revenue rose by 59 per cent compared to 2014, with around 47.5m iPhones sold in the quarter. Comparatively, between 60 and 70 million S6 and S6 Edge units are expected to ship before the end of 2015, according to Juniper research.

Two rumoured new smartphones are expected to be unveiled at an event in New York on August 13.