Samsung posts best Q2 profits in two years with robust S7 sales

Beating all expectations, Samsung has registered a 17 percent rise in its operating profit for the three months that ended in June over the same period a year ago. At the heart of the recovery is the sustained popularity of Samsung’s flagship S7 phone, which analysts say has sold well despite the competitive pressures from Apple. Reinforcing that success are steady sales of the company’s lower-end phones.

The South Korean technology conglomerate said in a regulatory filing on Thursday that its April-June profit was likely 8.1 trillion won ($7 billion), better than the average forecast of 7.8 trillion won tipped by a Thomson Reuters survey of 16 analysts. This was the highest since 8.5 trillion won profit in the first quarter of 2014.

"Firm Galaxy S7 sales and growth in sales of mid- to low-tier smartphones have strengthened the mobile division's market power and profitability, underscoring the recovery in the company's smartphone competitiveness," Eugene Investment & Securities said in a report ahead of the earnings guidance.

While Samsung will not disclose detailed results until late July, analysts said ahead of the earnings guidance the mobile division would remain the top earner for the second straight quarter on the back of strong Galaxy S7 sales.

Some analysts say Samsung shipped about 16 million Galaxy S7s in April-June, with a higher-priced curved-screen version outselling its flat-screen counterpart and boosting margins.

Lackluster sales of offerings from rivals such as Apple and LG Electronics helped to reduce Samsung's marketing expenses, they said.

Samsung said revenue for the quarter likely rose 3 percent from a year earlier to 50 trillion won, compared with 51.4 trillion won tipped by the Thomson Reuters survey.