Samsung Electronics on Thursday reported its worst quarterly profit in two years and was downbeat about its second-half prospects, fueling concerns about its ability to protect its smartphone turf in the face of mounting competition.
With its flagship Galaxy S5 smartphone outsold by Apple's iPhone 5S in May and its cheaper devices feeling the squeeze from Chinese rivals like Xiaomi, Samsung is under pressure to come up with a new strategy to halt the slide.
For April-June, Samsung said operating profit fell 24.6 percent annually to 7.2 trillion won ($7.03 billion), matching its guidance. This marked the third straight quarter of profit decline and was the weakest result since the second quarter of 2012.
Profit for the mobile division fell to 4.42 trillion won from 6.28 trillion won a year ago, also the lowest in two years.
"Looking ahead, the second half of 2014 will remain a challenge," Samsung said in a statement, adding that profitability for the mobile division may suffer due to intensifying global competition.
Samsung's mobile division executives returned a quarter of their first-half bonuses and have downgraded to economy seats for shorter flights, evidence the South Korean tech giant is tightening its belt as it tries to regroup.