Samsung profits hit hard by Apple's iPhone 6 and Chinese rivals

Samsung has forecast a 60% plummet in third-quarter profits because of a fall in sales of its Galaxy smartphones, which have been undermined by demand for Apple's iPhone 6 and cheaper Chinese rivals.

Samsung ad: poked fun at Apple's iPhone 6 but the rival is eating Samsung's market sharere
Samsung ad: poked fun at Apple's iPhone 6 but the rival is eating Samsung's market sharere

The announcement follows in the wake of recent marketing by Samsung designed to poke fun at its Apple rival.

According to analysts, Samsung is positioned in an awkward middle-ground, where it does not charge as much for its Galaxy handsets as Apple does for its iPhones, while it charges more than Chinese rivals such as Lenovo and Xiaomi.

Samsung’s Galaxy smartphone has been losing share to cheaper models. The group, which also manufactures electrical goods including computers and TVs, said that while it expects the fourth quarter to continue to be challenging, it is anticipating "increased shipments of new smartphones".

For Q3, the South Korean firm is set to announce an operating income of 4.1tn won (£2.5bn) for the three months to September when it posts its results later this month. This is below analyst expectations of 5.2tn won. Sales totalled 47tn for the period.

Samsung said in a statement: "Smartphone shipments increased marginally amid intense competition. However, the operating margin declined due to marketing expenses related to aggressive promotions and lowered ASP (average selling price), driven by reduced proportional shipments of high-end models coupled with price decreases for older smartphone models."

Last month, Samsung kicked off a £10m marketing campaign to launch its Galaxy Alpha, with a TV ad featuring pop star Lily Allen.

The Alpha featured an updated design to the Galaxy, with a polished metal frame that marked a departure from its usual plastic frame and which was a clear nod to Apple’s iPhone.