Samsung continues to ride on Galaxy wave with profits at 2-yr high

Samsung Electronics, on Thursday, said that it expects solid earnings to continue in the second half of 2016, with stronger components demand likely to offset heightened margin pressures for smartphones.

The tech giant reported a 2 percent hike in its April-June net income to KRW 5.85 trillion ($5.17 billion), compared with KRW 5.75 trillion a year earlier.

That was slightly higher than forecasts, which have been revised upward in recent months to reflect stronger-than-expected sales of the new phones. Analysts had forecast net income of KRW 5.79 trillion, according to FactSet, a financial data provider.Sales rose 5 percent to KRW 50.94 trillion ($45 billion), while operating profit surged 18 percent to KRW 8.14 trillion ($7.19 billion), in line with the company's guidance earlier this month.

Samsung profits look big against the backdrop of slowing overall smartphone industry. Its rival Apple, the world's second-largest smartphone maker, is struggling to boost iPhone sales and reported a 27 percent quarterly drop in profits.

The world’s no. 1 maker of smartphones, however, said mobile profits would weaken in the second half after soaring 57 percent in April-June to a two-year high of KRW 4.32 trillion, and flagged higher marketing costs to combat new products from rivals.

While smartphone earnings looked choppy, Samsung said the components business would buttress second-half earnings amid signs of recovery in a memory chip and display panel prices after a global slowdown in gadget sales.“Looking ahead to the second half of 2016, the company expects its solid performance to continue compared to the first half, mainly driven by earnings increase in the component business,”Samsung said in a statement.

The company is expected to unveil its new Galaxy Note smartphone next week and will likely start selling its phablet about a month before rival Apple launches its new iPhones in September.